Fairfax is running an article today outlining how many baby boomers are unable to downsize, due to a lack of housing choice, which is keeping them in their large family homes to the detriment of younger families:
A lack of suitable housing for downsizing baby boomers is keeping them in their homes longer and constricting supply for first-time home buyers…
Not enough homes of the right size, with the right fittings and location, particularly in Melbourne’s middle-to outer-ring suburbs is preventing many of Australia’s retiring boomers – those born between 1946 and 1964 – from moving out of the family home they have lived in for decades…
Between 2006 and 2011, half the people who moved after turning 50 or older downsized. That represents a surprisingly small proportion of just 9 per cent of the total population over 50…
While lack of choice is certainly a problem, exacerbated by housing construction becoming increasingly focused on building shoe box CBD apartments for foreign buyers, it is by no means the only barrier to housing mobility.
The states’ heavily reliance on stamp duties, which can amount to tens-of-thousands of dollars, directly punishes those that move to homes that better suit their needs – be it empty nesters seeking to downsize or younger, growing families seeking more space.
The Aged Pension, by excluding one’s principle place of residence from the assets test, also encourages older Australians to hide their wealth in their home, rather than downsize and risk losing taxpayer funded benefits.
These are some reasons why I continue to advocate replacing stamp duties with a broad-based land tax and/or including some part of one’s home (e.g. the portion above the median house price) in the assets test for the Aged Pension – in order encourage more efficient use of the housing stock, as well as achieve greater equity and efficiency of the tax and transfer system.
