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It's Not Only Young People Who Can't Afford The Great Australian Dream

The number of Australians entering retirement without a home is rising alarmingly.

02/02/2017 2:16 PM AEDT | Updated 15/03/2017 5:48 AM AEDT

Australia's debate about housing affordability has the potential to blow up into a generational war in which millennials, who face a lifetime of renting, battle baby boomers with a swag of negatively geared investment properties.

But while each side defends their position, we're ignoring the elephant in the room -- aged pensioners.

Why do they matter in this debate? Because, in our rapidly aging country, more and more people are growing old without a home to call their own. While twice as many people rent today than in 1981, the data on older renters is among the most troubling. The number of peopleaged 55 and older in the private rental market grew 43 percent to 336,174 counted in the 2011 Census, up from 235,348 in 2006.

Since then, we have seen house prices surge in capital cities such as Sydney and Melbourne, making it a safe bet last year's Census will show the trend for older renters surging ahead. If current trajectories continue, in the not too distant future we might see an entire generation with no place to live during retirement -- among them will be many people getting by on the pension.

The structure of superannuation and the aged pension assume all older people own their own home. Clearly, both the structure of superannuation and the rental market are crying out for review.

Imagine you're living on the pension and trying to find a home to rent in one of Australia's biggest cities. Anyone who's battled the rental market in Sydney or Melbourne knows it's near impossible to find anywhere affordable these days. In fact, Sydney was found to be Australia's least affordable city for rental accommodation in the most recent Rental Affordability Index (RAI), while, of all cities, Melbourne has seen the greatest decline in affordability since 2013.

In these markets, rental bidding -- where people offer more than the advertised price -- is rife. Last year Consumer Affairs Victoria survey found one in five Victorian tenants offered extra rent to secure a home, some as much as $100 a week. Anyone living on the pension doesn't stand a chance in this bidding war.

A single person eligible for the full age pension can expect an annual income, including pension and energy supplements, of around $22,805. While pensioners who rent are also eligible for Commonwealth Rent Assistance (CRA), several government reviews have found the payment has not kept pace with rising rents, including a 2015 review by the Reference Group on Welfare Reform.

As such, we've seen housing affordability stress grow substantially among older renters over the past decade, according to a 2015 Productivity Commission report. In fact, one in four people aged over 75 who were receiving commonwealth rent assistance in 2014 were experiencing housing stress -- deemed as when more than 30 percent of a household's gross income is spent on rent.

There's a reason homeownership is our Australian dream. A home promises security, stability and shelter -- a basic human right.

There's a reason homeownership is our Australian dream. A home promises security, stability and shelter -- a basic human right. For older people, a home becomes even more valuable and more socially important. It's a vital financial resource, which can lessen life stresses and delay the move into aged care.

Those among us who grow old without our own home face an increased risk of poverty and homelessness in our old age. Indeed, one out of every seven peoplecounted as experiencing homelessness on Census night in 2011 were aged over 55.

It's time to confront the elephant in the room: the number of Australians entering retirement without a home is rising alarmingly, yet the structure of superannuation and the aged pension assume all older people own their own home. Clearly, both the structure of superannuation and the rental market are crying out for review.

Australia mustn't be a country that ignores people in their twilight years. We need to work together to build innovative financial solutions to give older people excluded from the housing market a path to the Australian dream.

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