“The growing longevity and ageing of Australia’s population, as well as other structural and demographic changes, elevate the policy imperative to understand what drives the housing decisions of older people and the consequences for their wellbeing.” - Productivity Commission, Housing Decisions of Older Australians.

The Australian Government Productivity Commission (AGPC) has released its third flagship research paper investigating issues relating to Australia’s ageing population, this time focusing on senior’s housing choices.

Housing Decisions of Older Australians examines the policies affecting the supply and cost of residential aged care and other age-specific housing, the influence of the tax and transfer system on housing decisions, and the issues in using home equity release to support living standards in retirement.

Key findings from the report show that Australian’s unambiguously prefer to ‘age in place’, either in their family home or within their community, and that government policy, housing affordability and availability, and the costs of transitioning from homes to aged care facilities are contributing factors to this trend.

According to the Commission’s survey, only one in five older Australians have sold their property and purchased a less expensive home since turning 50, and about five per cent have sold and moved to renting.

The vast majority of older Australians are living in private dwellings, and about 80 per cent own their home, opting to employ home carers and make modifications to their residences to prolong their stay rather than relocating to an aged care facility.

The report suggests that residential aged care has “effectively transform[ed] into an end of life care service,” backed by findings that the average age of admission into residential aged care is increasing at the same time as the average tenure of those in facilities is decreasing.

PLANNING BARRIERS

In relation to the design industry, the report highlights that state and local planning systems have contributed to this trend by creating barriers to expansion and innovation in both mainstream and age-specific housing. It suggests that there are only a small number of statewide planning policies that deal with housing for older Australians as a systemic issue, and local government implementation can also be significantly improved.

According to the Commission, age-specific housing development is often disadvantaged relative to other housing or commercial development and operators of retirement villages and aged care services have reported significant red tape in dealing with planning and development approvals, both for new facilities and for modification and redevelopment of existing outdated stock.

“Planning rules that constrain the development of smaller, higher density residential properties inhibit downsizing, and innovative housing proposals often face NIMBY opposition,” reads the report.

“The desire of most older people to age in place strongly signals a need for revision of state and local government planning regimes, to reduce the barriers to the supply of new housing options. Reforms in this area could potentially deliver the greatest gains in affordability and diversity of housing options for older Australians.”

These findings mirror a November report from National Seniors Productive Ageing Centre (NSPAC) titled Seniors downsizing on their own terms which suggests that although reluctance to downsize or move to an appropriate aged care facilities is based on a myriad of personal and financial considerations, product availability (or lack thereof) has been identified as a significant impediment.

“It is clear that there is a gulf between what many seniors want and what is available in the present marketplace,” reads the report.

“This dearth of appealing housing stock seems to stem, in some cases, from a lack of innovation and flexibility in terms of development, planning and design.”

The NSPAC report suggest that although many seniors are content with staying in an existing home, a significant number of contemporary seniors, particularly Baby Boomers, are tempted to downsize. They just can’t find where.

It also reflects findings from the recent Harper Review of Competition Policy, now officially backed by the federal government, which suggested reforms to planning and zoning at state government levels. That review found many planning practices favoured particular operators and zoning laws that were highly restrictive on the matter of permissible uses. The review advocates for reformed business zones by simplifying requirements and allowing a broader range of activities to be considered.

URBAN TASKFORCE ASKS PLANNING TO SUPPORT DOWNSIZERS

The Urban Taskforce has responded to the NSPAC report on planning impediments to downsizing for older Australians, saying it raises important issues that needs addressing by planning.

“The National Seniors Productive Ageing Centre has over 200,000 members so issues they raise are important to consider in relation to housing of seniors,” says Urban Taskforce CEO, Chris Johnson. “The report by the Centre, ‘Seniors downsizing on their own terms’ finds that impediments from overly complex and inflexible planning systems and government policies are restricting the potential for older Australians to downsize to smaller housing units.”

“With advances in health care many seniors remain active for decades after retirement and they prefer to maintain an active lifestyle before moving to aged care facilities. An ideal option for these people is to downsize from a large suburban house to a nearby apartment close to amenities. There are many examples of apartment buildings that have attracted older people due to the nearness of public transport, community facilities and health services,’’ says Johnson.

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KEY POINTS FROM THE AGPC REPORT (courtesy of the AGPC)

- There is a general lack of affordable downsizing options for older Australians, due in large part to the red tape and inconsistencies within state and territory land planning regimes.

- Residential aged care is effectively transforming into an end of life care service. The age of admission is increasing (now 83 years on average), average tenure is about 2 to 3 years, and care needs are higher.

- Many older people are reluctant to plan or get advice for possible future care and end of life needs. Decisions can be prompted by crises, and made when the person is vulnerable.

- There are positive signs from the recent reforms in aged care, including improved financial viability, transparency, and consumer sovereignty. However, further reform is needed.

- About 800 000 older Australians receive home care. Older people’s desire to age in place aligns with governments’ fiscal goals — in most cases, assistance for home care is considerably less costly than for residential aged care. Nevertheless, there may be merit in increasing co-contributions for both home and residential aged care.

- Most of older Australians’ wealth is in the family home, but it remains an untapped source of retirement income. Many older Australians, including some of the poorest retirees, continue to save (spending less than their Age Pension) even very late in life. The main reasons for such behaviour are precautionary saving and a strong aversion to debt in old age.

This precautionary saving is driven by uncertainty around longevity, health and residential aged care needs, and is a potentially expensive form of ‘self-insurance’ that can lower living standards in old age.

- Most older Australian home owners on low incomes could achieve a modest retirement living standard over the remainder of their lives by drawing on their home equity.

- Financial equity release products could facilitate withdrawal of home equity to fund retirement needs. However, this market is small and unlikely to grow in the near term:

Most providers are diffident due to small market size and the risk of reputational damage.
Broader reluctance by older people to tap into home wealth and strong aversion to debt, coupled with the high cost of such products are impeding

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Nathan Johnson

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