Terry’s View - Lazy Policy Won’t Fix Crisis

In yet another case of lazy policy thinking and really bad media behaviour, we’re now seeing older Australians being blamed for the nation’s worsening housing crisis.

The Retirement Living Council suggests more than 59,000 homes in Australia could be “freed up” if retirees weren’t fearful that selling their large family home was going to have a significant impact on their pension.

It recommends a series of changes targeted at older Australians with low to moderate wealth to “rightsize” without financial penalty.

Some commentators have seized on this, claiming that if only Boomers would move out, we could solve our housing supply crisis overnight – which is an absurd proposition.

Let’s be clear - this isn’t about stubbornness or selfishness on the part of older Australians. It’s about policy failure at every level of government for the past two decades.

Older people downsizing doesn’t increase the supply of dwellings. The shortage of homes is the big over-riding problem in the housing crisis and Australia needs to create a large number of new dwellings.

Downsizing is moving from one home to another – it doesn’t unlock new supply as our shallow media has claimed.

The average Baby Boomer is living in a home that the average first-home buyer can’t afford – so, again, a Baby Boomer downsizing does not unlock new supply for young Australians.

Financially, downsizing is often a terrible deal, the cost of selling and buying is prohibitive and can easily exceed $100,000 once stamp duty, commission and selling costs are taken into account.

Boomers aren’t just sitting in oversized houses for the sake of it — many want to stay close to family, maintain their communities, and live in homes filled with decades of memories.

Even if every single empty nester magically sold tomorrow, it wouldn’t come close to fixing the structural shortage.