Looking to sell their family-sized houses and move into smaller, compact and more manageable homes, baby boomers are hoping their retirement dreams aren’t being crushed by the property market.
According to the Baby Boomers Housing Lifestyle Report, recently released by realestateVIEW.com.au, one in three Australians aged 50 to 69 are uncomfortable with increasing property prices and fear that they will not be able to fund their retirement due to the rise in property prices and the associated taxes.
The report also revealed that baby boomers in NSW are the hardest hit, as more than half of respondents believe they will have to relocate to a new area to afford a smaller home.
But what is causing this concern? Property prices are going up, children are staying at home longer, the same bills are coming in, but there is only half the money coming in, if at all. Plus, there are relocation costs.
“On average, you’re going to be paying another 10 per cent to relocate,” REINSW President Malcolm Gunning said.
What can baby boomers do?
The question is: what can be done to solve the issue? Some say it’s all about being open to moving out of your comfort zone.
According to Mr Gunning, expectations are part of the problem.
“If they’re looking to sell high and buy low, best to get out of Sydney. But if they want to stay in the city, they’ll need to adjust their thoughts.”
Mr Gunning suggests possibly looking at an apartment, rather than another family home.
“More is less when it comes to lifestyle. Moving into the inner city, it’s the lock-and-go lifestyle, where strata takes care of the maintenance so owners can simply lock their doors and head off to travel the world.”
According to Greg McKinley, Director at Richardson & Wrench Elizabeth Bay/Potts Point, baby boomers are still downsizing.
“We’re still seeing a lot of people come out of big homes and buy apartments, so I don’t see it as an affordability issue. I think it’s more of a lifestyle issue and whether they’re looking for that lifestyle or not.”
Lobbying for retirees
“Change is long overdue and REINSW is already calling for tax reform,” REINSW CEO Tim McKibbin said.
When it comes to the government, there is plenty that can be done to help keep baby boomers financially secure and in a property that they own. Nowadays, people are retiring later, especially with the pension age climbing. But there is little support for older workers to stay in their jobs or find more suitable ones, particularly part-time employment.
A reconsideration of superannuation rules may be necessary, allowing a higher contribution for people over a certain age or threshold to help boost retirement savings.
In Victoria, there is a stamp duty concession for pensioners who meet the criteria, based on certain thresholds. Closer to home, the ACT has recently reduced its tax rates for transfer stamp duty.
“Stamp duty in NSW has not been reviewed for more than 40 years. NSW should look to follow the ACT, which, on top of the tax rate reduction, has also brought in incentives for the over sixties,” Mr McKibbin said.
“High stamp duty charges inhibit growth, especially when it comes to the retirement sector. For retirees living off superannuation or a pension, stamp duty is a huge burden. REINSW has long lobbied for changes to stamp duty.”
If NSW followed Victoria and the ACT, pensioners and retirees may be able to stay in the property market longer.
Mr Gunning goes so far to say that two concessions may be needed. A stamp duty concession, much like Victoria, for people living off their superannuation or pension, and a higher concession for those who are willing to move to a regional area.