This article was first published By RILEY MORGAN FOR DAILY MAIL AUSTRALIA on the 10th Oct 2016 | Image: Getty
- New research shows the startling pressure of life-long renters in Australia
- If renters do not purchase a home by their 45 they most likely never will
- Capital gain tax should be cut said author of Swinburne University study
- Renters over the age of 50 experiencing financial insecurity in retirement
If Australians do not buy a house by the time they are in their late 40s they will most likely will be life-long renters and suffer in retirement, new research claims.
A paper released on Monday by Swinburne University found Australians that do not purchase a property by the time they are 45-49 years-old probably never will and renting into retirement will compound financial stress.
The statistic will be a worrying realisation for the young Australians claiming they have been priced out of the property market – meaning they have no chance of becoming first home buyers.
In September, Finder.com.au released a survey of more than 2,000 Australians and discovered that 47 per cent, equating to 3.6 million people, would consider renting for life if current property prices do not deflate.
According to Domain one of the authors of the university study, Andrea Sharam, suggested capital gains tax should be on the chopping block and death duties need to come back to help reduce the widening gap between homeowners and non-homeowners.
‘Housing is a probably the key way of generating wealth, but people who are unable to purchase or fall out of home ownership will find that they don’t have as much wealth in retirement,’ Ms Sharam said.
Earlier this year, experts admitted it will be difficult for renters to retire in a better financial position than property owners, but the new research has all but confirmed that renters are already facing significant financial stress before retirement.
Sydney is transforming into a rental market, which places pressure on renters with the Australian retirement income system presuming retirees will own a home outright.
To exacerbate the market gap, the social study showed older Australian renters over the age of 50 are also experiencing housing insecurity and with growing population estimates this will place a huge strain on the rental market.
Currently there is nearly 426,000 Australians over the age of 50 living alone or renting with a partner, but taking into account population projections this number will skyrocket to 832,319 in 2050.
‘That will put a lot of pressure on the pension system and even more pressure on the rental market, which does not cater to older people on low incomes as it is,’ National Shelter executive officer Adrian Pisarski told Domain.
Older Australians have an estimated 85 per cent rate of home-ownership and the number of first-home-buyers has halved in the last decade, according to the latest ABS data.
Ms Sharam said increased spending on social housing and her aforementioned policy changes – to discourage home owners buying property for capital gains – are aimed to help reduce inflation and allow first home buyers to enter the market.
However, Victorian Property Council executive director Sally Capp said this move would be counterproductive resulting in less investment in residential property construction.