Age pension drives hike in investment properties

Can retirees be the newest growing market of the real estate industry?

Age pension drives hike in investment properties

by Kay Rivera

Strong growth in investment properties and holiday homes as a financial asset was identified in the latest report by Australian Housing and Urban Research Institute (AHURI). “In 2002, around one quarter of households approaching retirement had a second property and this grew to 30% in 2014,” the research network said.

This growing appetite for acquiring more properties, specifically residential ones, is linked to the retirees’ increasing desire to avail of their Age Pensions.

“The research also suggests that retiring householders aged 55+ are not re-structuring their financial assets or boosting levels of owner-occupied housing to make sure they are eligible for the Age Pension,” AHURI added. 

The data collected by Household, Income and Labour Dynamics in Australia (HILDA) from 2002 to 2014 reconcile with this observation, having recorded that the share of owner-occupied housing in a retired household’s asset portfolio has fallen from 46% in 2002 to 39% in 2014.

While the report highlighted an important market insight, it also acknowledged that economic challenges associated with an ageing population present stark policy choices for the Australian government.

At present, the Australian retirement incomes system consists of four interconnected pillars: the Age Pension, mandatory savings in the form of superannuation, private savings and owner-occupied housing.