The great housing dilemma

In 1967 psychiatrists Thomas Holmes and Richard Rahe examined the medical records of 5000 patients and found 43 major life events that had a positive correlation on causing illness.

One of these events – moving house – while not quite at the top of the stress scale alongside divorce, death of a spouse or imprisonment, nonetheless had a significant impact on people’s health.

The stress of moving house may explain why staying put is a particularly attractive option for older Australians, many of whom live as singles or couples in houses with three or more bedrooms that they own outright.

According to a recent Australian Housing and Urban Research Institute survey of 1604 older home owners, more than 90 per cent believe their house is the right size – even once the kids move out – despite them being considered far too big by international standards.

If you were to judge the size of the house using the Canadian Occupancy Standard – the government-preferred measure to calculate the appropriateness of housing occupants to household size and composition – 88 per cent of their homes would be regarded as ”grossly under-occupied and hence under-utilised”.

When asked by the researchers what options they would consider as they got older and living at home got more difficult, most said they would rather alter their house with grab rails and ramps and stay on instead of moving to a retirement village.

Moving into their children’s homes was also distinctly unappealing – fewer than one in five said they would even consider such a scenario.

Going on 2006 figures, people 55 and older make up nearly 25 per cent of Australia’s population.

If you do the maths, that equates on the current population of 22.4 million to 5.6 million people.

Concentrate just for the moment on people who are 65 plus.

According to modelling by the Bureau of Statistics this age group will nearly double from its 2004 level of 2.6 million to 4.6 million by 2021.

On current trends the bureau estimates that the percentage of people aged over 65 in the population will jump from 13 per cent now to 19 per cent in 2021 and up to 28 per cent by 2051.

Add on the 55 to 64 age group and the figure will get substantially bigger.

Australia is up there among the most expensive places in the world to buy a house. The chronic shortage of homes also means it is now one of the worst places to rent.

So we have a situation where house prices are at record levels, rents are rising, and home ownership among young people is falling.

Combine that with the fact that 1.7 million people in Australia have two, three or more properties – baby boomers are heavily into property investment – and the availability of housing, already unbalanced, will only get worse.

Get even one-fifth of the baby boomer and beyond generation to downsize into smaller accommodation and, Bingo!, you’ve solved the housing demand problem and no doubt pleased many frustrated young families in the process.

But like many seemingly simple solutions, there’s a flaw.

The baby boomers are a bit of a handful, says the AHURI study’s lead researcher Associate Professor Bruce Judd from the University of New South Wales. They don’t have any intention of downsizing.

Those extra two or three bedrooms are just the right size for hobbies, exercise, study or simply having the grandkids and other visitors stay a week or two, the boomers maintain.

And being a generation that has grown up with protest they are not shy of asserting their rights. They will be educated, articulate and opinionated retirees, says demographer Bernard Salt.

”Complaint can become a marvellously engaging hobby for those looking for something to occupy their time: writing letters, going to meetings, getting their heads on the tele,” he says.

The findings are important because governments are slowly beginning to grapple with the planning implications and policies needed to deal with what may become a sizeable problem.

If the number of people older than 55 is likely to double by the end of the next 11 years and they all want to rattle around in large three-bedroom houses, where does everyone else go?

Governments are assuming that Australians want to downsize their homes as they grow old. They don’t.

Planners are focused on increasing density by encouraging smaller, apartment-style dwellings to cater for this perceived need.

Similar reasoning prompted the NSW government in July this year to introduce stamp duty concessions – savings of up to $22,490 on a new $600,000 property – to encourage older people to move out of their family manors.

Somewhat inexplicably, the Victorian government has no intention of providing similar incentives.

The problem is exacerbated by the fact it is cheaper for governments to have people stay in their homes rather than have to pay for some sort of institutional care.

”Rather than have people feel they have to move into residential care, which is very expensive for the government, they’re encouraging and developing more ways of supporting people at home,” Professor Judd says.

Governments will need to decide which way to jump to avoid an already bad housing situation getting worse in the future.