08 May, 2019
Home ownership is a strong part of Australia’s cultural identity, our way of life. That does not change when you retire…in fact, most Australian retirees prefer to continue living at home. And why not? Home is where you’ve raised your family, created memories, established yourself in a community.
Sadly, for many retirees, the need to fund 25-30 years of retirement leads them to sell the family home to downsize into a smaller home or unit, or retirement village. This often results in disruption and dislocation and doesn’t always deliver a financial advantage.
In 2017, researchers from Australian National University polled over 2,500 Australians and found home ownership remains a national aspiration (see figure one).
The majority of Australian retirees own their own homes at retirement; despite government incentives to downsize it’s not the preferred option for most people. In fact, Australians have a strong intention to remain at home by comparative international standards (figure two).
A Productivity Commission report released in 2015 found that over 60% of older Australians would strongly prefer to ‘age in place’ by staying in their own homes. Over three-quarters (76%) of over-60s told the Commission they want to see out their retirement in their own home, and 83% view home ownership as vital to maintaining independence and financial freedom as they age.
There are numerous benefits that arise from older Australians ageing in their family home:
More recently, an article published by ABCNews interviewed pensioners who, in the words of one, were ‘asset rich but income poor’.
In other words, their homes are valuable, but retirement funding inadequate. As those interviewed reinforced, not all retirees want to downsize and most want to stay in their own community and maintain their social connections.
Selling the family home, moving to a lower-priced property and using the differential to fund retirement is often suggested as a major opportunity to improve access to home equity. Despite that, there are a number of downsides to consider:
The Productivity Commission report found that age-specific housing such as retirement villages are very expensive and limited in number and location. On top of that, retirement village fee structures are regulated in a way that makes them overly complex and difficult to compare.
Although most Australians want to age at home (figure three), longer lives combined with retirement funding inadequacy may lead to retirees being forced to prematurely downsize or relocate to retirement homes with significant disruption and financial disadvantage.
More importantly, in-home poverty, forced downsizing or premature relocation to aged care may undermine the lifestyle and wellbeing of retirees and the economic burden of retirement. New approaches that can help Australians remain at home and meet the challenges of both longevity and retirement funding adequacy will play an important part of meeting the needs of many older Australians.
 Housing Decisions of Older Australians, Productivity Commission, 2015
 ANU poll of Attitudes to Housing Affordability, March 2017