The Retirement Living Council (RLC) has today released a new report - Removing Rightsizing Roadblocks: Homes for all Australians - that examines removing financial roadblocks for NSW retirees to 'rightsize' while also creating housing opportunities for young families.
RLC Executive Director Daniel Gannon said the report showcases how reforms to the Age Pension asset test threshold and Commonwealth Rent Assistance (CRA) eligibility will reduce the financial insecurity felt by thousands of older Australians. The report proposes to:
- Allow single homeowners who 'rightsize' to own assets of up to $550,000 before their Age Pension income is reduced, with an equivalent increase to the threshold for couples. The current threshold is $314,000 for singles.
- Remove the incoming purchase price threshold for Age Pensioners who 'rightsize' into retirement villages to allow access to CRA payments, consistent with eligibility applicable to residents in other seniors' communities (land lease and manufactured home estates). Currently the cap is $252,000.
Mr Gannon said the changes could lead to significant outcomes in NSW by:
- Releasing 13,653 homes across 200 suburbs back into Sydney housing markets.
- Encouraging an additional 21,591 seniors to access retirement village housing options.
- Generating more than $383 million in stamp duty revenue for the State Government.
- Reducing costs and demand on public housing, hospital and aged care systems.
- Improving quality of life for older Australians as more people move into age-friendly retirement villages.
Age Pension reform
Mr Gannon said there had been a 600 per cent increase in capital city median house prices over a 30-year period from 1994 to 2024, while the allowable assets to receive a full Age Pension increased by just 178 per cent for a single homeowner and 193 per cent for a couple.
"This shows that increases in Age Pension assets have failed to take into account the high level of asset wealth many older Australians now hold in their home," he said.
"This has the unintended consequence of discouraging 'asset rich, cash poor' older Australians from 'rightsizing' into more suitable housing.
"When government policy locks older people in their homes, something isn't right.
"There are tens of thousands of older Australians trapped in big 'family' homes while young families are stuck in housing limbo."
Mr Gannon said 73 per cent of NSW's over-75 population - or approximately 491,000 people - are living in 'oversized' homes that are no longer suitable to their ageing needs.
"When people keep living in homes no longer suited for ageing bodies, it often leads to trips and slips, which over time means increased interaction with GPs and hospitals," he said.
"We can't afford to have older Australians miss out on living in communities that keep people healthier and happier for longer because their pension might be pinched."
CRA reform
The RLC is also urging both major parties in the lead up to the federal election to provide a pathway for older Australians to access the CRA scheme, without limitation, if they choose to enter a retirement village.
Different people receive CRA based on different circumstances, and it even differs between housing types. For example, people who are on the Age Pension and live in land lease communities are eligible for CRA payments from the Commonwealth, regardless of the price paid.
"By contrast, retirement village residents who receive the Age Pension and pay more than $252,000 for their leasehold unit are ineligible for CRA. This disparity makes no sense given both are seniors' housing options keeping people healthier and happier for longer," Mr Gannon said.
"The average price of a two-bedroom retirement unit in metropolitan Sydney is $914,424, while the median price of houses in the same postcodes is $2,245,438. This shows the affordability of retirement communities but at the same time the absurdity of a $252,000 CRA cap."
The RLC's report shows that in 1997, the CRA limit covered 55 per cent of the median house price. Today it covers just 26 per cent.
"Housing markets have evolved significantly, yet CRA eligibility practically remains frozen in time, meaning older Australians are increasingly worse off," Mr Gannon said.
This new report, prepared in conjunction with Ansell Strategic, reveals the average value of homes released across the nation is $825,000. These dwellings are primarily self-contained homes with three or four bedrooms, located in outer metropolitan areas, and ideal for younger families.
According to the report, the projected cost of the reforms - if applied prospectively across Australia - would be $244 million per annum.
Across NSW, homes that could be unlocked are predominantly situated across five LGAs: Shellharbour, Cessnock, Maitland, Shoalhaven and Lithgow.
"These reforms would impact approximately 57 per cent of the over-65 population, leading to improved housing, health and financial benefits for people young and old," Mr Gannon said.
"There are approximately 80,000 people who live in about 700 retirement villages across NSW - the majority of whom receive the Age Pension - representing a significant voting block ahead of the federal election."
