Pensioners are being encouraged to downsize to free up larger homes for younger families under a proposed new law which has been broadly welcomed, but a lack of housing could be a hurdle.
A Bill has been introduced to federal parliament which would give age pension recipients an extra year before the proceeds from the sale of their homes affect their pension payments.
Labor said the asset test exemption was aimed at giving people more time to purchase, build or renovate a home.
Ray White chief economist Nerida Conisbee told NCA NewsWire the incentive was in addition to the downsizer superannuation benefit, which allowed older people to put up to $300,000 into their super using the money from the sale of their main residence.
“While it is difficult for families to find big enough homes, particularly in desirable suburbs, the capacity in existing homes is high,” she said.
“It is estimated that there were around 13 million spare bedrooms in Australia, with many older people living in homes with several spare bedrooms.”
But Ms Conisbee said financial hurdles were not the only obstacles keeping older people in big homes.
“There are also challenges for many to find more suitable smaller homes and of course, there is the emotional attachment so many have to where they live,” she said.
“Nevertheless, reducing the financial burden of downsizing should go some way to encourage people to move.
“It may not lead to a flood of properties entering the market, but we should see an uptick.”
Data on population by age group by suburb was recently released by the Australian Bureau of Statistics.
It provided details on where the most people aged 65 and older live, which Ms Conisbee said indicated where any downsizer incentives would provide the biggest uplift in availability of family homes.
“While some suburbs may contain a lot of older Australians because there is a retirement community or aged care facility, the mix of where the most 65 plus years residents are is an interesting mix,” she said.
“It includes some very desirable suburbs such as Glenelg in Adelaide, Sandy Bay in Hobart and Brighton in Melbourne, where there are likely lots of families keen to settle into big family homes.”
Propertyology’s head of research, Simon Pressley, told NCA NewsWire the Labor government had come up with a good initiative, but there were some challenges to getting older people to give up a home they had lived in for a long time.
“Let’s say there’s a family with a couple of kids … wanting to buy that traditional middle ring home, but they’re more located a lot further out of town and they don’t want to live there,” he said.
“Then you’ve got the traditional empty nesters, who have got this big home … I think the idea of the policy is let’s create an incentive to get people thinking about something that they wouldn’t otherwise think about.
“It’s a good policy, but if they really want it to work, the incentive needs to be bigger. People don’t move homes on a daily, weekly, annual basis. They’re attached to it.
“To pack, to change addresses, it’s a bloody nightmare. You don’t want to do that unless there’s a benefit at the other side of that, like accepting a job promotion.”
Mr Pressley said the policy was targeting people in the second half of their life, who had achieved a lot and they did not need to move.
“If you want them to move, you need to make it absolutely worth their while to even think about, let alone to actually action it,” he said.
Mr Pressley said it was a drop in the ocean to get a couple of hundred people to take advantage of such a policy.
Some elderly people might also be holding onto their properties so their children could inherit it one day. Mr Pressley said the policy could include an additional carrot for those people.
“Rather than saying if you sell you can do X with X amount of money and we won’t tax you, as an alternative suggestion, try to tie the incentive to say we’ll allow you to gift some money to your children without taxing them,” he said.
“Because some of these people might be thinking that we’ll do that when we die, we’ll leave that in our will.”
More than 8000 pensioners downsized last year.
Article source: www.goldcoastbulletin.com.au
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