The decline of a homeowning society? Asset-based welfare, retirement and intergenerational equity in Australia

Abstract

Researchers have increasingly recognised a link between homeownership levels and retirement policy, particularly in English-speaking welfare states. Housing is central to asset-based welfare policies, which may enable households to efficiently manage life course risks, but may exacerbate wealth inequality and expose them to market volatility. Australia presents an important case for understanding the dynamics of asset-based welfare, with its retirement approach combining high homeownership rates and a limited public pension. This paper investigates emerging generational differences in homeownership in Australia. Recent research has identified declining homeownership amongst younger cohorts. Using cross-sectional data, we explore alternative theoretical explanations for this trend. We find no evidence that declining homeownership reflects changing investment choices or delayed family formation. Instead, recent trends are consistent with intensifying inequalities based on class and care responsibilities. This casts doubt on the viability of Australia as a homeownership society and asset-based retirement policies in a financialised economy.

Keywords:

• Asset-based welfare
• homeownership
• wealth inequality
• generational equity
• retirement policy

Acknowledgement

The authors would like to thank Professor Keith Jacobs, the editors and the three anonymous reviewers for very helpful feedback on earlier versions of this paper.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Although housing policy is a joint responsibility of the Commonwealth and States, our focus is on the national level because it is the largest financier of housing policy and space constraints impede a discussion of each State and Territory.

2 The amalgamation of the Commonwealth and State Housing Agreements (CHSAs) and other programs into NAHA make it difficult to track spending trends after 2008 (see Groenhart & Burke, 2014). NAHA also funds the National Rental Affordability Scheme, which offers a subsidy to private sector and community organisations that build dwellings that are rented below 80 per cent of market rates for 10 years (Yates, 2013, p. 117).

3 As recently as the 1980s, defined benefit schemes had been the prevalent form of super account (Treasury, 2001).

4 The make up of the cohort may have changed somewhat over time due to death and migration, but is broadly comparable for our purposes.

5 These groups were chosen both for convenience and analytic reasons. Our interest was not in the highest income earners, but in comparison of higher than average income earners, hence the choice of the 40/60 divisions. Of course, these data only reflect income in one year, rather than earning capacity over time.