Australian demographic trends and their implications for housing subsidies

This Positioning Paper is the first output of a project that aims to forecast future housing subsidies that will accompany projected demographic changes and the challenges these trends may pose for the fiscal sustainability of housing policy. Population ageing is a key demographic trend that features strongly in Australia’s future demographic projections and has important implications for the future of Australia’s welfare system, including the role of housing policy in that system. In particular, there are fears that the budgetary cost of housing subsidy arrangements will blow out as the Australian population ages. But there are also wider concerns in this context. Increasing numbers of home owners are approaching retirement with mortgages, and a sizeable number of older mortgagors are dropping out of home ownership, particularly those affected by separation and divorce. So there is now a growing interest in whether the type of housing subsidy required by seniors will change, and the risks this might present for retirement incomes policy. Our forecasts will shed light on these issues by modelling the consequences of demographic trends under different home ownership projections.