Why empty nesters won’t downsize

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Downsizing seems the rational and ethical thing to do if you’re an empty nester rattling around in a big house. But Australians have an aversion to downsizing. When it comes to our homes, most of us aren’t governed by reason and sense. We’re governed by emotion.

A new report from the think tank Per Capita makes it clear older people are generally loath to ‘free up’ houses for the younger generation. They’re staying put in homes that in some cases may be unsafe for them. Removing the financial barriers to downsizing doesn’t seem to hold the answer.

And that’s because most people stay put for psychological reasons. They don’t respond to Treasury’s cold language of ‘under-occupation’ and ‘efficiency’. They love their homes and garden; they’ve invested time and energy in them. The home is a repository of memories and precious possessions. For some, it’s the last bulwark of independence. At this very moment some elderly Australian is protesting, “I’ll leave here in a box.”

“Public policy needs to grasp these complexities,” says the report author, Emily Millane, “rather than focusing solely on … whether older people are seen to be … making an ‘efficient use of housing stock.’“

Because so many older people want to stay put, it may be time for the government to bite the bullet, and provide more help to make their homes safer. Ms Millane wants the government to set up a scheme to help older Australians retrofit their houses. It’s one of many interesting recommendations in her report, The Head, The Heart & The House. ‘Ageing in place’ is what governments want us to do because it’s cheaper than subsidising a move to a nursing home; and it’s what most older Australians prefer. But stairs, unmanageable gardens, narrow doorways, and tricky bathrooms can imperil people’s safety. Alternatively, some older people are stuck in denial, pretending they can manage these impediments when it’s clear to their children they’re one day away from a fall.

A government scheme to reimburse older Australians for home modifications would have to be carefully implemented. Given a lot of older Australians have valuable homes destined for their children’s inheritance, such a scheme could easily become a home improvement rort.

“It wouldn’t be a case of here’s $50,000 because you’re over 70,” Ms Millane said. “There would need to be regulations about what constitutes appropriate grants and for what purpose; and Government could not be directing funds to people who were able to fund their own renovations.”

Small modifications could make a big difference: ramps, handrails, chairlifts; and repairs to make a house safer, drier, and healthier. Bigger changes, like creating a space for a live-in carer, might also be possible. But grants would not necessarily be confined to physical improvements. Technology has advanced in ways that make it safer for older people to live independently. Sensors that monitor people’s movements in the home might suit some; or technologies that remind people to take their medication might qualify for a grant.

As well as making homes physically safer, there’s the human element. A burgeoning older population living at home will require a big home care workforce to help them. How to pay for quality care, and ensure it’s no longer rationed? Ms Millane says the government should facilitate a home equity release scheme. Asset-rich Australians should be obliged to borrow against their home to pay for home care. They would get a loan payable back to the government once their house was sold. What do you think?

A lot of my friends have been talking about downsizing but hardly anyone’s taken the plunge. Instead these empty nesters have consciously decided to stay put. What they’ve done is smarten up or renovate houses they’ve lived in for 20 years to make them fit for another 20. In their 80s perhaps they’ll revisit the downsizing question, or perhaps not.

Despite the perception that downsizing is commonplace – what with sea-changers, tree-changers, and the inner city apartment boom – the percentage actually making the move is surprisingly small, as I’ve written before; only 9% of Australians aged 50 and over moved into a smaller place over the five-year period from 2006 to 2011.

Will baby boomers adopt a different attitude to downsizing as they get older? The idea of being asset-rich and cash-poor like many in their parents’ generation may not appeal. I know 60-somethings who plan to sell the home ‘when they’re old’, find an apartment, free up some cash, and enjoy life. Not for them a frugal existence in the family home on the pension and some measly super. It remains to be seen whether, when the crunch comes, they’ll feel any less attached to the family home than did their parents.

In the meantime, there’s research for the government to do. The Housing Help for Seniors pilot was introduced by the Labor government but axed in Tony Abbott’s first budget. It protected the age pension for people who sold their homes to downsize. The scheme had low uptake but it ran for barely six months. Worth another look?

We need a national housing policy responsive to the ageing population, including a growing number of renters. Initiatives to encourage downsizing will succeed only if they address the psychological barriers to moving. But for the majority of elderly who’ll probably stay put, we also need policies to make their houses safe.

 

Adele Horin was the social issues journalist with the Sydney Morning Herald for 18 years prior to her ‘retirement’. This article was first published on Adele’s Coming of Age blog (adelehorin.com.au), and is reproduced with her permission.

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6 Responses to Why empty nesters won’t downsize

  1. Peter Grace February 16, 2015 at 11:41 AM #

    Speaking as an ‘oldie’ who has downsized the biggest disincentive was packing up or disposing of all the ‘stuff’ we’d accumulated in 30 years of living in a ‘big’ house. For us there wasn’t so much an emotional attachment to the building we were leaving (you can have my pool, big garden and empty bedrooms) but finding a place to put all the memories and things we couldn’t throw away in the much more convenient ‘small’ house.

  2. Paul February 16, 2015 at 10:39 AM #

    Interesting, where I live (inner west Sydney) there are a very large number of recent downsizers. Previously younger professionals drove the market.

  3. Tortoise February 15, 2015 at 5:24 PM #

    All great ideas but no one wants to pay for free lunches for all!

  4. Stewart Smith February 13, 2015 at 10:49 AM #

    I am against spending public money toward these private matters.

    However, what should be done is to give a stamp duty exemption to retired persons or Seniors who are willing to downsize their home properties.

    Having to pay HUGE new stamp duty imposts just to move to a smaller house is an awful imposition of costs to people in this circumstance, and it often eats up most of the difference in capital values of the newer smaller property vs the larger older property.

    Charging for Stamp Duty is the problem, not lack of subsidies.

  5. Simon Disney February 13, 2015 at 8:04 AM #

    When people bought their house back in the 1960’s and paid $15,000 for it, perhaps one of the psychological barriers is the thought of having to shell out $25,000 just in stamp duty alone when they ‘right-size’ to a new place. A lot of oldies around me with little superannuation, 30 kms from Sydney have sold up, collected $700,000 for their ‘old fibro’ and moved to a country town, either up the coast or a couple of hours inland. They are the smart ones and they now have an enviable lifestyle, but some are fixated on the original purchase price of the house – and how much they would have to pay in stamp duty, commission and legals, despite the fact they are still trousering $400,000 and are still eligible for the pension! Inadequate and overloaded medical facilities are another turnoff for some, who have to return to Sydney for specialist treatment. Fix stamp duty and healthcare and I’d venture to suggest that more people would exercise the option to escape the stress and traffic of the big smoke.

  6. Owen February 12, 2015 at 9:15 PM #

    Taxpayers paying retirees to renovate their houses! There’s an idea I hope is never realised.

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