According to new research from the REST Super fund, the home ownership dream will remain but a dream for a quarter of Australians approaching retirement age.
The data, compiled by REST Industry Super, estimates that while today only 15% of retirees are not home owners, that number will escalate to 25% by the year 2036 – meaning one in four would retire without owning a home and would be forced to rely on other savings and investments.
This is a concern given that by retirement age most people have up to 78% of their assets in property.
Declining home affordability is the main reason for such disappointing statistics.
Significant component of financial advice and policy has been developed around the assumption that people will own their home when they retire. While home ownership has long been one of the key pillars of Australia’s retirement income policy, it is certainly showing signs of crumbling.
It is true that many young people are putting off the purchase of their home until they are well into their thirties. Lender home loan requirements are far more stringent so many First Home Buyers need years to put the necessary deposit together.
According to the Australian Bureau of Statistics, Home ownership rates have been stable at about 70 per cent for decades.
The US, UK, Canada and New Zealand have similar rates, while those of Italy, Spain and Poland are between 82 and 96 per cent. By retirement age, 80 per cent of Australians usually own their own home.
In 2007/08, 78 per cent of those aged over 65 owned their home outright, while five per cent were still paying a mortgage. REST defined home ownership as either owning or paying a mortgage on their primary place of residence, but excluded investment properties.