Home ownership rates have fallen almost 20 per cent in the past 40 years, with further headwinds propelling Australia towards a growing population of “retiring renters”, according to the REIA.
REIA President Hayden Groves said the Federal Government’s release of the sixth Intergenerational Report (IGR) painted a scary picture for young Australians when it comes to housing and taxation.
The IGR is a comprehensive snapshot of the social and economic headwinds and opportunities Australia faces between now and 2063.
“It does confirm what many young Australians are experiencing firsthand – a growing ‘us and them’ divide,” Mr Groves said.
“The IGR highlights that homeownership fell by 18 per cent from 1981 to 2021 for those aged between 30 and 34 and 17 per cent for those aged 25 to 29.
“The chances of homeownership is getting slimmer. It’s harder and harder, particularly for younger Australians to get into home ownership and realise the dream of owning their own home.”
Mr Goves said making it even more difficult was that with an ageing population, the younger generations were being increasingly relied upon to pay the lion’s share of income tax to sustain growing spending in health, government interest rates and the ageing population.
The IGR forecasts that Australia’s population will reach 40.5 million by about 2063, by which time the number of people aged over 65 will have doubled and the number of those aged over 85 will be triple what it is now.
The number of centenarians will be six times current figures.
“Income tax receipts are projected to grow from 50.5 per cent of total tax receipts in 2022-2023 to 58.4 per cent in 2062-2063,” Mr Groves said.
“A very tricky time within the next few decades for Australia, given that we are an ageing population, and it is getting harder for younger people, aged less than 30 years, to get into housing.
“Housing affordability has deteriorated over the last 20 years by about 15 per cent. Yep. So it is much more difficult.
“So we are desperate for more housing supply in this country. We know with more supply we will even up the demand and supply relationship and we will start to see prices moderate and houses become more affordable and that’s what we need.”
Mr Groves said two key interventions need to be made to sustain Australia.
“One, we will face a growing population of ‘retiring renters’ and need to better use the accumulation period of superannuation to fund retirement housing as well,” he said.
“Two, we need holistic taxation reform – already ruled out by the Treasurer – to alleviate these pressures on the future workforce and critically look at antiquated taxes like stamp duty across the Federation.
“The IGR sadly once more reflects the short-term nature of Australia’s electoral cycle and the intractable nature of some reforms like tax and housing despite all the evidence pointing towards the need for a wholesale restructure of these areas to help our future generations succeed.”
The IGR also showed the economy is projected to grow at a slower pace over the next 40 years with real GDP tipped to grow at an average annual rate of 2.2 per cent, which is 0.9 per cent lower than the past average.
After increases in population are accounted for, the average annual growth rate of income per person is projected to be 1 per cent, compared with 2.1 per cent over the past 40 years.
Total government spending will also need to rise from 24.8 per cent currently to 28.6 per cent within the next 40 years.