Renters in their 40s who don’t own a property are not only unlikely to ever become home owners, but are also at risk of becoming homeless new research predicts.
The grim findings are contained in a new report ‘Security in Retirement: Impact of Housing and Key Critical Life Events‘, released today by Swinburne University’s Institute for Social Research.
Increasingly it’s just about people not being able to afford to buy because the cost of housing is so large now.
The increasing cost of housing is one of the main reasons why some middle-aged Australians will never become home owners, according to Research Fellow Dr Andrea Sharam.
“It’ll be a mixture of things. For people in their late 40s it may be that they’ve never been able to save enough to get a deposit and then pay off the mortgage as they go. There are a lot of people whose incomes are quite low even though they’re working. So the cost of purchasing housing is a significant barrier to home ownership,” she says.
“A lot of people also fall out of home ownership as they buy with a partner and get divorced later. One if not both (parties) then fall out of home ownership and back into private rental market and quite a few of them won’t ever re-enter home ownership.”
Sharam says that while some Australians may struggle to earn the money to afford a home for a variety of reasons, “increasingly it’s just about people not being able to afford to buy because the cost of housing is so large now”.
For those in their 40s who are currently private renters “there is a very high risk of homelessness,” and most lack the savings to keep renting in retirement, Sharam says.
“If you’re 47 now you have to be putting away at least $10,000 a year for every year of retirement to pay towards your rent,” she says.
With almost 426,000 Australians aged 50 and over currently renting privately either on their own or with a partner, Sharam says the number of those who not only fail to own their own home but then become homeless will increase as baby boomers retire.
There is a very high risk of homelessness
The research also shows that Australians not only need a partner to afford to own a home, but they also need a significant other or housemate to help pay the rent.
“Yes you can pay $400 a week easily on a flat (now) so for a lot people, they would need to have someone else in there sharing the rent,” she says.
The report calls for a range of reforms to combat the rapid cost of housing which is locking more and more Australians out of the market.
Sharam says a small death duty should be introduced which could fund more social housing and she also advocates changes to negative gearing. The current system inflates house prices and locks more and more Australians out of the market, she says.
“It’s about clawing back, we have a set of tax incentives but they go to rich people and it makes them richer and at no point do they return any of the wealth that they’ve made back to the taxpayer. At the same time we’re apparently quite happy to impoverish what is now a very significant part of the population.”