Across Australia today there are 5 million people over the age of 55. Within the next 40 years, that number is anticipated to exceed 11.5 million people.
Within a generation, a third of Australians are going to be aged 55 years old. Almost a quarter are going to be over 65 years old.
If all those aged 55 years were to relocate into a new dwelling, there would be a need to create 90,000 new homes across Australia each year. Most 55 plus households cannot afford to move into more appropriate housing due to high entry and rental costs. Currently there is a need for approximately 15,000 new retirement dwellings per year.
Around 80% of 55 plus households own their home outright. Around 15% are either renting or living with relatives. Half have not moved in more than 20 years and most have not moved in the last 5-10 years. The number of times a person moves declines with age. One in 10 moves is a result of wanting to be closer to family or friends. 35% of 55 plus households move for lifestyle reasons, 25% move on the basis of affordability and 20% move wanting a smaller home.
Many Australians over the age of 55 own their home outright but find themselves cash-poor. Recent data indicates 35% live on less than $350 per week. 55% are living on less than $500 per week.
Today the median house price is $540,000 across Australia’s capital cities. Older Australians tend to own older properties which in very general terms have a lower median value. Many of these properties require repair. They are often located in the middle to outer suburbs and lack renovation appeal by younger Australians.
The oldest of the baby boomers (born 1945-1964) are now starting to retire. 25% of the Australia’s population is made up of baby boomers. They represent 38% of households and 43% of the paid workforce.
The question is what will the baby boomers do with their residential assets once they start to retire? The following are all possibilities.
Remain in the family home but retrofit and rent out a proportion to family and/or tenants.
Sell investment properties.
Consider a reverse mortgage.
Downsize, rebuy and bank the difference. However the right stock may not be readily available.
Sell secondary homes.
Looking ahead there will be fewer housing starts and sales on a per capita basis. Pressure will be placed on restoring or upgrading deteriorated middle ring suburbs. Over the next decade it is anticipated price growth will slow. To make housing more affordable it would assist baby boomers along with other market segments to have stamp duty paid by the vendor and not the purchaser.
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