This is not a story about the young and the way they have been crushed by boomers, who own all of the houses. It’s a story about the old.
We hear so much from the young and, yes, being forced out of the property ownership market is tough. You see your own parents in their own homes and wonder if you can ever make that happen for you. Yep, but you might need to wait until they die.
Waiting that long might not be an option and it’s quite depressing to see governments fail even in attempts to manage housing affordability.
No, this is a story about the other victims of housing affordability.
People my age and older, who never bought a house. Or women on the terrible end of a divorce and the worse end of a property settlement. People who might have lost their jobs through illness and were forced to sell. Families whose circumstances are so beset with poverty and disadvantage that any kind of property ownership is completely unlikely.
All those people? They are renting and they are in trouble. In some cases, in much worse trouble than the under-40s. Why? There is no appetite to hire the old. If you are young, you are far more likely to get an interview and a subsequent job. The under-40s, at least, have the capacity to earn and to save.
It looks like the Turnbull government will try to take this on, as it finally recognises that we have a cradle-to-the-grave housing problem. That might be good news for the future but not so good for those struggling right now.
Australia has the second-highest rate of poverty among those on pensions in all OECD nations and it would be hard to find any group of politicians who actually care. The Australia Institute’s senior economist, Matt Grudnoff, has tried to make poverty even more explicit by calculating the number of households where all occupants were aged over 55 and not in the paid workforce. Maybe some were looking for work but, really, were unlikely to find it at that age.
Grudnoff says: “Our retirement system basically takes the inequality that exists in our society at the moment and then magnifies it in retirement.”
His research, conducted on behalf of Your Life Choices, shows retired renters spend on average almost one-third of their income on housing.
“While there has been understandable concern about young people struggling to enter the housing market, there is a hidden group of retirees in serious financial stress which is compounded if they do not own their home,” he says.
Yes, those retirees pays one-third of their income. If you need to spend that much money on keeping a roof over your head, researchers call that housing stress. And that leads to all other kinds of stress. Grudnoff says retired Australians in rentals also pay more for their cost-of-living expenses than other retirees ? and higher than average across all ages.
“The big expenses for retired people are going up faster for those in the most precarious economic situation,” he says.
That’s because the main cost is rent. Of all the necessities, rents have been rising the fastest. That huge chunk means there is less to spend on other necessities.
The single retired renter spends about $600 a year less on medical and healthcare costs (about 6 per cent of their yearly income) than a single retired home owner on an aged pension (about 9 per cent).
I guess it’s possible those who are renting are less sick but the more likely explanation is they have less disposable income. And the retired couple on the age pension who rent? Only 4 per cent of their weekly spend goes on medical and healthcare costs compared to 8 per cent for their couple friends who own their own homes.
All that money spent on rent means you don’t have money to spend on healthcare compared to those who own their own homes. Renters spent less on food because they have less to spend, not because they want to eat less.
The big obstacles to independent financial security – divorce, disability, unpaid work ? particularly in the years leading up to retirement, are nearly a guarantee of spending retirement in poverty.
No one much bothers about the old. No one can turn aches and wrinkles into hot takes. We no longer have the strident vitality, the emblematic qualities of the Gen-Y whinger as they berate their Baby Boomer parents. Those Boomers, some of whom are now old and lonely and increasingly poor.
Think all Boomers are fat cats, whose ride to wealth comes at the expense of anyone under 40? Nope. The unappealing aged are easy to punish, invisible, unloved. They are the hidden poor and appeals to protect the age pension go unheeded.
The declining rate of home ownership isn’t just affecting appealing young people. It’s already pushing the elderly into poverty. A report by independent economist Saul Eslake, for the Australian Institute of Superannuation Trustees, described its effect. If housing affordability continues to decline, more of us will use our super to pay off our mortgage debts. And more of us will end up on the age pension.
Already, more than one-third of Australian pensioners live in poverty. The housing affordability crisis will make it even worse.
Jenna Price is a columnist for The Canberra Times and Daily Life and a senior lecturer in journalism at the University of Technology, Sydney.