Industry experts warn that many Australians see housing as the top investment option, fuelled by a series of preferential housing taxes, leading to a deterioration in housing affordability.
The proportion of retirees who own two homes rose to more than 30 percent in 2014, up from 25 percent in 2002, according to the latest report from the Australian Institute for Housing and Urban Research, (AHURI). Although more and more retirees own multiple properties, the proportion of self-housing in retirement assets has fallen from 46 percent to 39 percent, while the proportion of investment homes in retirement assets has risen from 9 percent to 15 percent over the same period.
The report`s lead author, Stephen Whelan, an associate professor at the University of Sydney, said Australia`s existing tax system encouraged retirees to "live in housing", which had a significant impact on the housing market.
"under the current tax system, homeowners generally enjoy more favourable treatment," Whelan said. At the same time, the implied incentives can lead to the use of real estate as the main means of wealth accumulation. In other words, we provide an opportunity to take advantage of existing properties and accumulate them, which in turn leads to upward pressure on house prices. "
The report by (AHURI), the Australian Housing and Urban Research Institute, analyzed Australian household, income and labour dynamics data (HILDA) data from 2002 to 2014. The analysis suggests that older Australians are unlikely to qualify for their government pension by selling home investments.
Under the government pension benefit test requirements, family housing is considered tax-free assets. At the same time, owners can hold A $ two hundred and fifty thousand worth of non-duty-free assets, such as investment real estate, before lowering pension standards.
There are still plenty of incentives in the current tax system to encourage retirees to buy property, Whelan said, although investment properties beyond this range are not tax-free assets. "both tax deductions and indirect home purchase regulations can encourage retirees to adopt a housing pension as a post-retirement financial strategy," he said.
Shane Oliver, chief economist at AMP Capital, said that for many retirees, the benefits of owning a second home far outweigh the potential loss of a pension. "A lot of retirees are keen to invest in real estate, and they don`t seem to have the negative impact of losing their government pension in whole or in part," he said.
But, Shane Oliver warned that this excessive investment in real estate by retirees has made it a high-risk group vulnerable to volatility in the property market, compared to the past few years.
Australian residents` propensity to invest in real estate, as well as existing tax arrangements, have worsened housing affordability, said Brendan Coates, a (Grattan Institute) researcher at the Gratham Institute, an Australian public policy think-tank.
"retirees tend to need to accumulate more savings than other groups, and this trend is likely to lead to a personal financial crisis and exacerbate the housing crisis," he said.
"this is a good move," said, Brendan Coates, a move in the federal government`s new budget to expand the scope of the "Pension loan Facility (PLS)" to cover all retirees. Can help more elderly people at home to support the elderly, but also help to eliminate different phenomena.
Finally, in the report, AHURI called on government to reform the current pension system to meet those in real need. "some elderly people who have a lot of bank deposits (1 million) but live in rental housing are not entitled to government pension benefits," Whelan said. Some elderly people who don`t have bank deposits but use millions of homes are entitled to government pension benefits. This is a malformed tax arrangement, and reform is imperative. "
