While in the midst of a housing crisis, Australia has around 13 million empty bedrooms, prompting calls for a revolutionary “last homebuyer scheme” to help Boomers downsize and afford existing stock to the market.
In an upcoming episode of SBS Insight, Housing BOOMERS, host Kumi Taguchi explores the debate around downsizing in Australia.
Michael Blythe, former chief economist at the Commonwealth Bank is one of the experts who makes an appearance on the episode, where he spotlights the striking figures of empty bedrooms across Australia – space that exists but isn’t being used where it’s needed most.
With more than 37 years’ experience in economic policy and now economist-in-residence at Downsizer.com, Mr Blythe is exploring the idea of a “last homebuyer scheme” to make it easier for older Australians to downsize.
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SBS Insight host Kumi Taguchi on the upcoming episode of Housing BOOMERS
“We talk about this housing supply crisis but really it’s a bedroom glutton, just these bedrooms aren’t usable in the right kind of places,” he said.
“There are nearly two million people in Australia who are actively talking about downsizing or at least thinking about it, but there is a distinct lack of follow through and it comes down to a range of issues.”
Mr Blythe said many older generations are reluctant to move if they have been living in a house for a long period of time. Often it’s because they are familiar with the local area as well as the cost of stamp duty.
He added that developers had “until recently have not understood what downsizers want”.
“(Downsizers) don’t want tiny two bedroom apartments, they want something with a bit more space,” he said.
“The questions we often get from potential downsizers is will there be room for the family dining table and where am I going to park the caravan?”
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Mr Blythe said government red tape was also making the process more difficult for older Australians, pointing to the recent removal of stamp duty in South Australia as “absolutely the way to go” to help the process.
“Well over half of potential downsizers have one or two people living in the dwelling, but they’ve got three or more bedrooms empty,” he said.
“There’s a big mismatch, it’s all about how do you free up those bedrooms and make it more attractive or less costly to move.”
According to Mr Blythe, the goal of a ‘last homebuyer scheme’ would be to free up larger homes for younger families while helping retirees transition without financial or logistic barriers.
“It could be pretty much identical to a first homebuyer scheme,” he said.
“If you switch to helping last home buyers, these are people who are already in the market, you are freeing up supply when they move from their current house into the new one.”
Despite advocating for change, Mr Blythe himself embodies the dilemma. At 65, he lives in a four-bedroom home with his wife and is not planning to downsize yet.
SBS Insight’s upcoming Housing Boomers episode sees Kumi Taguchi explore the debate around downsizing in Australia
Mr Blythe discusses the idea of a last homebuyer scheme on the upcoming episode
“Despite promoting downsizing, I realised last year when I turned 65, I’m right in the middle of that 60 to 70 age range where people do tend to downsize,” he said.
“Certainly two of those empty bedrooms will be at my place.
“Right now we enjoy having that little bit of extra space. I spend a lot of time in the garden.”
He added at some point he will downsize, but does not feel ready at the moment.
“This older house is becoming more expensive to maintain and at some point pushing the lawnmower around will lose its attractiveness,” he said.
Mr Blythe said he understands the frustration for those who do not want to move.
“Governments can do more, developers can do more on that financial side,” he said.
“We need to get the settings right and then I think you’ll see it will happen more freely.”
One option for older Australian’s is downsizing their home to take advantage of the downsizer super contribution
Mr Blythe added that older age groups are at maximum wealth but its also at the point that their income drops dramatically because they have retired.
“They’ve ended up asset rich and cash poor and living in these older dwellings which are increasingly inappropriate as you age further,” he said.
“How do you fix this? You can downsize, move to a more age appropriate dwelling and free up some equity there to boost your income.”
Mr Blythe said although there is more assistance needed, there are not enough people using the downsizer superannuation concession scheme already in place.
“If you’re over 55 and have lived in your current house for over 10 years, when you sell you can put $300,000 as an individual or $600,000 as a couple into superannuation,” he said.
“Its very tax effective of course and a great way to boost your income but it’s a bit of a secret.
“This scheme has been around since 2018 but according to the tax office only 98,000 people take that up, there’s nearly two million downsizers.
“There are other options people need to be aware of to look around and find out how to work their way through this crisis.”
Mr Blythe said right-sizing was also important for many.
“By comparison, there are around one million people who are looking to upsize,” he said.
“If you start thinking about it that way it raises some other options for yourself and probably some other policy options as well.”
The Insight episode Housing BOOMers airs on SBS at 8:30pm on 28 April or can be streamed on SBS on Demand.