Nicola mcdougall
Nicola McDougall is co-author of The Female Investor. Image supplied.
  • Gratton Institute predicts only 57% of over-65's will own a home by 2056
  • Also found that women are twice as likely as men to re-enter the workforce post-retirement due to financial constraints
  • Rentvesting becoming increasingly popular for younger buyers

Most Australians still believe that they will have their own home paid off by the time they retire, but that is no longer a certainty, according to worrying research conducted by the Gratton Institute.

The research found that by 2056, the rate of homeownership for over-65’s will have declined from about 76% today to about 57%.

Author of The Female Investor, Nicola McDougall, said the declining rates of homeownership may see more people spending their twilight years living in poverty.

“The research means that young people in their 20’s today may find themselves without a home to call their own in retirement, with many likely to be financially stressed if they rent, or even to suffer poverty,” Ms McDougall said.

“Government research also consistently shows that women are far more likely than men to re-enter the workforce following retirement, often due to financial constraints.

“Women are also twice as likely as men to sell their house and move to lower cost accommodation because of tight financial circumstances in retirement, with even more data showing that more elderly women than men are living in poverty in Australia.”

Nicola McDougall, The Female Investor

Ms McDougall said the strong property price growth over the past year may have killed the dreams of property ownership for first-time buyers, but there are still ways they can help secure their financial futures, such as rentvesting.

In fact, according to the 2021 PIPA Annual Investor Sentiment Survey, the rise of the rentvestor is well and truly established among the cohort of new property owners.

“Among the first-time property buyers in 2021, the survey found that more than 37 per cent identified as renting elsewhere,” Ms McDougall said.

“The rentvesting strategy can help many young women and men achieve property ownership before they have met their life partner, which can make a significant difference to their wealth, security, and freedom later in life.”

Rentvesting often involves purchasing in a more affordable location while remaining renting in an area where you prefer to reside because it’s close to your place of work, friends and family, or near cafes, restaurants, and night-life, Ms McDougall said.

“While rents are rising, it is generally more affordable to pay rent than mortgage repayments in inner-city and blue-chip areas where property prices are sky-high,” she said.

“However, purchasing an investment property in a more affordable area – including smaller capital cities or major regional areas if the investment fundamentals stack up – can be achievable for many prospective property owners.

“Young people need to understand they their first property won’t be their last and there are myriad sound property markets around the nation that are much more affordable than Sydney and Melbourne.

“Of course, it’s vital that they seek the assistance of qualified property investment advisers if they go down this path to ensure they are investing in areas with the best chance of solid capital growth over the years ahead.”

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