The Baby Boomers who’re accidental millionaires thanks to the soaring value of their family home are regulars in the news.
But older Aussies are also the group most at risk from the slump in housing affordability in many cities, experts tell Starts at 60.
Professor Peter Phibbs, a housing specialist at the University of Sydney, says the stratospheric cost of buying housing has helped push up rental costs, leaving many renters on the Age Pension “doing it tough” because they have no way of increasing their income to cover rising costs.
“They’re paying the rent and utilities and whatever they have left over, they live on, and if they get an unexpected bill, they just eat less,” he says. “There’s no leeway.”
The stark warnings came as Sydney was ranked this week as the second most-unaffordable housing market in the world, coming in behind only Hong Kong in a Demographia survey – news that sparked political debate over whether Australia had a housing affordability crisis.
Although the Demographia survey looks at housing purchase prices, other surveys show that, despite rents across the capital cities falling in 2016, the cost of renting is still unaffordable for many people.
“Rents are going up faster than the pension,” Phibbs says. “They just haven’t got the financial resources to pay the rent people are demanding in urban areas.”
Fiona York, co-manager of the Melbourne-based Housing for the Aged Action Group (HAAG), says research shows Age Pensioners in the private rental market spend about 70 percent of their pension payments on rent.
“There’s a myth going round that all older people are homeowners,” she says, noting that between the 2006 and 2011 censuses, there was in fact a 44 percent jump in the number of renters aged over 55.
York’s group works on finding affordable housing for seniors. She says the Commonwealth Rent Assistance payment made to pensioners isn’t high enough to offer much assistance with Australia’s high rents, and that many people who seek help from her have been forced from their homes by rent increases.
About 60 percent of HAAG’s clients are women.
“A lifetime of lower wages means they’ve never got into home ownership and they’ve managed to survive in the private rental market while they’re working but once they’re not, they get forced out,” she says.
The rocketing cost of city land also means that older types of affordable housing, such as the cluster homes for pensioners that were often run by non-profit organisations, are being sold to developers who replace them with pricier apartment buildings, York explains.
Phibbs warns that the issue of older renters doing it tough isn’t going to go away.
“There’s going to be increasing numbers of older renters,” he says, as sky-high house prices lock more and more of today’s workers out of the property market.
Research released by Victoria’s Swinburne University of Technology in October shows there are 425,000 over-50s renters in Australia, with the number expected to rise to 600,000 by 2030 and to 830,000 by 2050, and that those people tend to have little personal wealth.
That growing number poses a big problem for future governments, lead researcher Dr Andrea Sharam cautions.
“This number of impoverished older people equates to a huge increase in demand for housing assistance,” she says.