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Housing wealth as retirement saving: Does the Australian Model Lead to Over-Consumption of Housing?

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  • Bruce Bradbury

Abstract

Owner-occupied housing has long been seen as a key pillar of retirement saving in Australia. The Australian elderly receive a relatively small amount of their income from occupational pensions, have high home ownership and private saving, and Australia is particularly unusual in that the majority of the aged population receive an income and assets-tested aged pension (which excludes the owner-occupied home). Does this model contribute to making the Australian elderly asset rich but income poor? How does pattern of housing wealth accumulation in Australia compare with that in other countries? This paper examines these questions using data from eight countries in the Luxembourg Wealth Study together with comparable Australian household survey data. Australian income and housing wealth patterns in retirement are very different to those of the other eight countries. After retirement, incomes fall more steeply and housing wealth is higher. Even though housing consumption as a share of total consumption increases after retirement in all countries, this increase is particularly steep in Australia (and possibly the US).

Suggested Citation

  • Bruce Bradbury, 2008. "Housing wealth as retirement saving: Does the Australian Model Lead to Over-Consumption of Housing?," LWS Working papers 7, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:lwswps:7
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    References listed on IDEAS

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    1. Morris A. Davis & Andreas Lehnert & Robert F. Martin, 2008. "The Rent‐Price Ratio For The Aggregate Stock Of Owner‐Occupied Housing," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(2), pages 279-284, June.
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    4. Disney, Richard & Whitehouse, Edward, 2002. "The economic well-being of older people in international perspective: a critical review," MPRA Paper 10398, University Library of Munich, Germany.
    5. repec:bla:ausecr:v:38:y:2005:i:2:p:159-175 is not listed on IDEAS
    6. Timothy Smeeding & Eva Sierminska & Andrea Brandolini, 2006. "Cross National Comparison of Income and Wealth Status in Retirement: First Results from the Luxembourg Wealth Study (LWS)," LWS Working papers 2, LIS Cross-National Data Center in Luxembourg.
    7. Jonathan D. Fisher & David S. Johnson & Joseph T. Marchand & Timothy M. Smeeding & Barbara Boyle Torrey, 2007. "No Place Like Home: Older Adults and Their Housing," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 62(2), pages 120-128.
    8. Luci Ellis & Dan Andrews, 2001. "City Sizes, Housing Costs, and Wealth," RBA Research Discussion Papers rdp2001-08, Reserve Bank of Australia.
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    Cited by:

    1. Alexandra Spicer & Olena Stavrunova & Susan Thorp, 2016. "How Portfolios Evolve after Retirement: Evidence from Australia," The Economic Record, The Economic Society of Australia, vol. 92(297), pages 241-267, June.
    2. Fedor Iskhakov & Susan Thorp & Hazel Bateman, 2015. "Optimal Annuity Purchases for Australian Retirees," The Economic Record, The Economic Society of Australia, vol. 91(293), pages 139-154, June.
    3. Cho, Sang-Wook (Stanley) & Sane, Renuka, 2013. "Means-Tested Age Pensions And Homeownership: Is There A Link?," Macroeconomic Dynamics, Cambridge University Press, vol. 17(6), pages 1281-1310, September.
    4. John Piggott & Renuka Sane, 2011. "The Impact on Residential Choice of the Family Home Exemption in Resource-Tested Transfer Programs," Working Papers 201112, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.
    5. Elisabetta Magnani, 2012. "Older Workers' Training Opportunities in Times of Workplace Innovation," Working Papers 201205, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.

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