The New Daily – 7 July, 2014.
By Jackson Stiles
Baby boomers want to retire in their larger homes, and have little desire to downsize or be shipped off to a retirement village, the latest research and experts suggest.
Despite the social stereotype of baby boomers moving to smaller homes, older Australians simply do not want to downsize, the latest research suggests.
Most over 50-year-olds prefer to have at least three bedrooms, according to survey results released by National Seniors in June.
Only one-quarter of older Australians living in a house with three or more bedrooms had downsizing on their minds. Those who had downsized in the past five years still chose a relatively large house.
Almost half had chosen three bedrooms, compared to only 17 per cent who moved to an apartment or unit.
Professor Bruce Judd, the leading researcher in Australia in this area, has found similar results. Based on Census data, Professor Judd and his fellow researchers at the Australian Housing and Research Institute reported in January that only 9 per cent of those aged 50 and over downsized between 2006 and 2011.
According to Professor Judd, policy makers often argue that these houses are under-utilised. If older Australians could be moved into smaller residences, more houses would be freed up at cheaper prices for younger families, or so the argument goes. Professor Judd isn’t so sure.
“I suspect that is a plausibility argument, rather than one based on hard evidence,” he says.
‘We shall not be moved’
Professor Judd, himself a baby boomer, is staunchly opposed to forcing retirees out of their larger homes if they don’t want to leave and says staying put is the trend.
“I’m all for choice. If people are happy living in three-to-four bedroom houses and they’re able to look after themselves, and it’s not bad for their health and wellbeing, then I’m all for them having the choice to stay there,” he says.
“I’m certainly not interested and I know many others I’ve spoken to and interviewed aren’t interested in cohort living like that. They want to live in the general community.”
It seems many are going to exercise this freedom.
The latest Productivity Commission report predicts that by 2050, over 3.5 million older Australians will access aged care services each year. Approximately 80 per cent of those services will be delivered in the community, rather than in an aged care facility.
Federal governments seem to be encouraging this. The Abbott Government continues to fund Ageing in Place, which aims to encourage continued home living through assisted care.
Why isn’t downsizing more popular?
Older Australians often have a good reason for holding onto their “spare” rooms. These uses include a home gym, a room for rent, or a spare bed for visiting family, according to Professor Judd’s research.
For those who do choose to downsize, Professor Judd’s latest study shows that most do so to improve their lifestyle or because the upkeep on their large home is becoming difficult or impossible.
“Obviously, as you get older, maintenance of a big house and yard becomes more difficult. Cleaning the gutters, looking after the garden, mowing the lawns, things like that,” Professor Judd says.
The cost barriers to downsizing
John Millar, information officer at COTA WA Seniors’ Housing Centre, says he is forced to dissuade many older Australians from downsizing because it is often not a financially sound option.
We point out to seniors the fact that it’s going to cost them a lot of money to downsize.
“We point out to seniors the fact that it’s going to cost them a lot of money to downsize. That money could be better spent bringing services into the home,” he says.
The majority of Mr Millar’s clients live in houses valued between $350,000 and $550,000. They want to continue living in the same area, close to family, friends, their favourite doctor and other familiar services. But they often cannot afford the smaller, newer properties in the area, which are frequently the same price.
Once you add on the cost of selling the larger home, which Mr Millar estimates to be as much as $20,000 to $30,000, any financial benefit to downsizing is negated.
The federal government had considered a program to encourage pensioners to downsize their homes, but scrapped the idea in the 2014-15 Budget due to a lack of evidence it would work.
A spokesperson for the Department of Social Services told The New Daily that lifestyle considerations seem to be more important factors to retirees than the cost.
What about a ‘Last Home Buyers Grant’?
Professor Judd can see the benefits of a ‘Last Home Buyers Grant’ (although he dislikes the implied “foreboding” of the term).
“Yeah, I think that could be quite useful. In fact, the policy people we spoke to in our policy forums were quite convinced about that,” he says.
“They were of the view that if you did reduce some of those barriers like the pension eligibility question, stamp duty exemptions, and maybe some Last Home Buyers Grant or something like that, they were convinced that the percentage of downsizers would increase.”