Two in three retirees who rent privately owned homes live in poverty and the problem will get worse, a new report has found.
Most older working Australians who rent do not have sufficient savings to keep paying rent in their retirement, according to the report from the Grattan Institute.
More than half of households aged 65 and older who rent report a total net financial worth of less than $25,000, compared with just 6% of homeowner households of that age.
Grattan’s Brendan Coates said Australia was failing too many retirees who rent.
“The report really identifies that while most retirees are doing pretty well – they’re actually more financially comfortable than many working-age Australians – it’s retirees who rent who are really struggling,” Coates said. “And they’re in a lot of strife.”
There are more than 200,000 retired Australian households renting in the private market, of which 67% are living in poverty. Poverty rates among single men and single women are even higher, at 74% and 78% respectively.
Between 1981 and 2021, home ownership rates among the poorest 40% of 45- to 54-year-olds fell from 68% to 54%.
Coates said this number would continue to dive. “This problem is going to get worse,” he said.
“Home ownership is falling, and it’s falling fast. Today’s older renters who are in work are tomorrow’s renting retirees.
“We’re going to see more people renting in future, and many renters are not on track to have enough savings through their super to cover the cost of rent.”
Coates called on the government to lift commonwealth rent assistance, which supplements the age pension for less well-off retirees who rent.
“The problem now is that social housing is also a smaller share of the housing stock,” he said.
He said Australia’s income support system “hasn’t updated for this emerging reality, which is that more people are going to rent”.
The government has lifted the maximum rate of rent assistance (now $211.20 for singles) by 27% – over and above inflation – in the past two budgets.
But even after these increases, a single retiree who relies solely on income support can afford to rent only 4% of one-bedroom homes in Sydney, 13% in Brisbane, and 14% in Melbourne.