Fresh data has highlighted the need for new government policies to make the downsizing process easier for seniors, according to the Property Council of Australia.
The group pointed to new figures released by the Australian Bureau of Statistics (ABS) which showed that one-third of older Australians in low income households have less than $5,000 in cash and other liquid assets, with nearly their entire wealth locked up in the family home.
Mary Wood, executive director of retirement at the Property Council of Australia, said the data showed that a large proportion of older Australians were asset-rich and income-poor.
“A typical older Australian will have $600,000 in property assets but will be living day-to-day on a fixed income,” she said.
“We need to put in place the right policies that help older Australians downsize. All too often, a pensioner considers downsizing only to reject it because it would mean a hit on their pension.”
Ms Wood said many older Australians who downsized were being hit with a reduction in their income, despite owning the same amount of assets when they made the move.
“The reasons for downsizing are often health-related – wanting homes without steps or big backyards to maintain, and lower rates and utility costs,” she said.
“It makes little sense, both from an economic and a health and wellbeing perspective, to trap older people in large and often unsuitable family homes, with little money available to spend.”
Ms Wood said the Property Council of Australia had proposed an adjustment to the means test to exempt some proceeds from the sale of the family home by full-rate age pensioners over 75.
“The cost to the budget is minimal. This type of targeted reform that removes the current disincentive to downsize will benefit income poor pensioners, as well as make the pension system fairer and more sustainable.”