A new study on home ownership in Australia reveals that people are increasingly delaying home purchase, leaving them at a great disadvantage at retirement.

The new report titled ‘Housing in an ageing Australia: Nest and nest egg?’ by the ARC Centre of Excellence in Population Ageing Research (CEPAR) analysed the links between home ownership and population ageing, and found that the trend of postponing home purchase was broadly consistent with other social and demographic trends.

In contrast to previous generations, younger people are increasingly putting off the decision to buy a home. Given that people are living longer and choosing to settle down at older ages, this makes sense, says Rafal Chomik, a CEPAR senior research fellow at UNSW Sydney and the report’s lead author.

For instance, over the past 50 years, the median age of home purchase has increased by six years from 27 to 33 years, and getting a first job by two years, while finishing education has been delayed by five years, having a child by seven years, and getting married by eight years. The median age at death is now 12 years later, allowing people to catch up and purchase a house later in life, says Chomik.

While factors such as housing affordability and access to housing finance are also important, he observed that the trend toward home purchase delay takes on a new meaning when placed in a broader demographic context.

Investigating the links between housing and demographic ageing, the CEPAR report highlights the vulnerability of older people who end up as renters at retirement.

“Home ownership serves multiple purposes and housing outcomes affect financial and personal health and wellbeing over the lifecycle. It acts as a home – the nest – as well as a store of wealth – the nest egg – to guarantee financial security in retirement,” Chomik explains.

According to Centre director John Piggott, Scientia Professor of Economics at UNSW Business School, “Housing has long been a critical pillar in wellbeing and social support through the life course. It is at least arguable that our social protection system has relied on a high owner-occupier ratio in order to function sustainably and adequately.”

The Australian retirement system is built on the premise of homeownership; therefore, excessive or indefinite deferral of home purchase can have consequences. For instance, lifetime homeownership rates will decline, banks may not lend past a certain age, more people may retire with debt, and a greater number of older people will potentially end up renting, leaving them vulnerable to relative poverty, housing affordability stress, and, in the extreme case, homelessness.