A Business Insider article made waves last month arguing “baby boomers are making the 2021 housing crisis worse” by staying put in their empty nests and not moving into smaller dwellings.
The article was met with varying responses, and boomers were not happy to be blamed for millennials being locked out of the market and the lack of housing supply.
But is there any truth to it?
The Australian Institute of Health and Welfare’s home ownership and housing tenure report, released in June 2021, shows home ownership rates by birth cohort and age group from census data taken in 2017.
Home ownership rates for 25-29-year-olds was 37.4 per cent, and 81.7 per cent for 65-69-year-olds.
Comparatively, the home ownership rate for those now aged 65-69 when they were 25-29 was 54.2 per cent.
President of the Real Estate Institute of Australia (REIA) Adrian Kelly said the senior generation are in fact remaining in their larger properties instead of ‘right-sizing’, but there are several different reasons for this.
“Yes, it is happening but they’re not sitting tight just for fun, and they want to be in something more suitable for many reasons, but it’s an interesting market at the moment,” Mr Kelly said.
“We know it’s very hard to buy something in the current market and if they sell, they don’t want to be homeless, but it’s a vicious cycle where if they don’t sell then it doesn’t unlock property for other people to buy.”
Mr Kelly said the costs involved in moving are an additional barrier to ‘right-sizing’ for the older generation as “a lot of boomers are asset rich and cash poor”. The real estate agent fees and stamp duty on the property they may buy add up to a significant amount of money.
“There’s uncertainty due to the pandemic and a nervousness to the market. We’re not seeing the volume of listings coming onto the market we usually see at this time of year and the really high demand is seeing prices rise across the country,” he said.
“Everyone is aware of the problem, but we’re hopefully heading towards whatever we call normal and perhaps next year we’ll start to see supply meeting demand, to some extent.”
Offering a different view, business and economy editor at The Conversation, presenter of The Economists on ABC Radio National, and a visiting fellow at the Crawford School of Public Policy at ANU, Peter Martin AM, said he believes that argument is “authoritarian”.
“Personally, the houses that we grew up in are not that big by today’s standards – you ate in the kitchen rather than the dining room and had one lounge instead of a family and lounge room. In my suburb of Hackett, the houses today seem like a palace compared to what the houses were like,” Mr Martin said.
“I think people like space, and the baby boomers, whose children have left them, are finally getting the space they never had. It’s a particularly cruel policy to suggest just in the time of their life that they start to have space for themselves, they should give it up.”
Mr Martin believes that there’s no real problem or anything preventing people downsizing if they want to, and since they would be moving into a smaller dwelling, they’d even make money in the move.
However, his opinion is that boomers shouldn’t be blamed for the housing supply demand because, specifically in Canberra, the ACT Government has the opportunity to bring prices down by releasing more land for housing.
“It’s the ACT Government that decides when an area of land is turned into a suburb, and they do this by matching supply with demand. In Canberra’s case, the argument that boomers not downsizing is affecting housing supply is wrong. If it’s true the boomers were sitting on houses, the government would just release more land in the ACT,” Mr Martin said.
“The argument doesn’t work; if the government is aware of the problem, they adjust their behaviour. The real tragedy is the government acts as if it has an unofficial house price target, and as though it doesn’t want house prices to fall. If it wanted greater availability or to bring house prices down it could easily do it.”
Mr Martin said the ACT is a special case, and unlike other cities, house prices hardly ever go down, so it’s a good market in which to own a house.
“These people that are in a house that by today’s standards is small, finally have enough of it to themselves and people are going to say they should leave? I just don’t like it, I think it’s authoritarian,” he said.
What’s your opinion? Have you say in the comment section below.
Get all the latest Canberra news, sport, entertainment, lifestyle, competitions and more delivered straight to your inbox with the Canberra Daily Daily Newsletter. Sign up here.
