Up to one-third of Australians will not be home owners when they retire, and this Australian dream-turned-nightmare will force super funds to profoundly re-think their strategies, and communications with members, according to Damian Hill, CEO at REST Industry Super.
REST’s exclusive research on the vanishing Australian dream of home ownership shows that up to 33 per cent of 25 to 34 year olds will not own their homes when they retire, and they face a long and poverty-stricken retirement if they have not treated their super like a mortgage and re-visited it frequently to see if they have the best deal.
An attitude shift is essential, said Hill: “With declining rates of home ownership, the time is right for Australians to make an attitude shift, to apply the same level of attention to their retirement nest-egg as they previously would have to purchasing a property.”
REST’s findings echo those of AIST’s recent study, “Super-poor but surviving”, which researched the experiences of 800 Australian women in retirement.
AIST CEO Fiona Reynolds said that “nearly all the women interviewed commented that being a debt-free homeowner is important to their financial [and non-financial] wellbeing”.
“Though most think it unlikely,” Reynolds added, “they are comforted by the knowledge that they have the option of downsizing or using a reverse mortgage to release some of the equity in their home should they ever need to supplement their income.”
In 2009-10, the number of first-home buyers in Australia fell from 190,000 to just 90,000, according to REST’s research, authored by Louise Southall, of research and policy firm, The Right Research.
Hill said that “with so many Australians choosing not to, or unable to enter into home ownership, it’s inevitable that for an increasing number of Australians, buying property will no longer be the largest investment they make in their lifetime”.
Five groups were critical in this fundamental shift in the Australian approach to what was formerly the retirement safety net for more than 80 per cent of the population.
First, individuals needed to see that the lack of home ownership in retirement could mean they faced higher costs (of renting) with a smaller pool of retirement savings.
Second, financial planners had to factor in whether a person rented or owned property when discussing investment options.