Housing equity withdrawal: Uses,risks and barriers to alternative mechanisms in later life
This project, funded by the Australian Housing and Urban Research Institute (AHURI), uncovers the uses, risks of and barriers to housing equity withdrawal (HEW) by older home owners aged 45 years and over via three alternative mechanisms: in situ mortgage equity withdrawal (MEW), downsizing and selling up. Its overall objective is to provide an evidence base for policies and programs aimed at maximising the availability and quality of information to support Australians in their decision-making over the use of housing wealth in later life.
The project is particularly relevant in the context of population ageing. As the cost of providing age-related payments and services escalate, governments are beginning to view the owner-occupied home as a key store of wealth that can perform a pension role beyond that of ensuring low housing costs in old age, encouraged by the fact that the majority of older home owners in Australia hold most of their wealth in the primary home. However, the increase in the use of financial instruments that facilitate in situ MEW throughout the life course is creating a concern that growing numbers of home owners will approach or enter retirement with large outstanding debts. Furthermore, recent economic events have highlighted the potential riskiness of housing as a vehicle to fund retirement. The benefits of HEW may also be limited by taxation and the impact on means-tested benefits in Australia.