Another lost opportunity for housing affordability
The 2017 budget highlights the government’s preference for cosmetic rather than consequential changes in housing policy. On downsizing, the government has badged a giveaway to a small number of seniors as a housing affordability measure. It sounds good: the new incentives are supposed to encourage seniors to move to housing that better suits their needs, while freeing up equity for their retirement and larger homes for younger families. The trouble is, research shows that most seniors are emotionally attached to their home and neighbourhood and don’t want to downsize. However, the plan ignores pensioners, the group most disadvantaged by downsizing because their family home is exempt from the pension assets test but any equity unlocked by downsizing is not. Those who will benefit are overwhelmingly self-funded retirees who will be able to make large super contributions even when their super account balance already exceeds $1.6 million. Roughly 35,000 people aged over sixty-five had a super balance exceeding $1.6 million in 2014. Each had a home valued at an average of $1.3 million, and net wealth of over $7 million. By definition, none of this group receives any age pension.