Australia has 13 million spare bedrooms. Is there a better use for them?

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Australia has 13 million spare bedrooms. Is there a better use for them?

By Tawar Razaghi

Australia has 13 million spare bedrooms new data shows, and that number is set to grow thanks to an ageing population holding on to “empty nests” with little incentive to downsize.

The number of spare bedrooms increased from 12.7 million in the 2017-18 financial year to 13 million in the 2019-20 financial year, according to the Survey of Income and Housing released by the Australian Bureau of Statistics.

The number of spare bedrooms is on the rise, given little incentive to downsize.

The number of spare bedrooms is on the rise, given little incentive to downsize. Credit:iStock

Two-thirds of those were in households with a couple only, or a single person, and most of those surveyed owned their own homes.

The combination of the family home exemption from the aged pension asset test, stamp duty and planning restrictions are preventing empty nesters from downsizing, doing little to help alleviate housing affordability and free up homes for growing families.

Ray White Group chief economist Nerida Conisbee said the country had a shortage of suitable homes in well-located areas for growing families.

“There are hardly any spare bedrooms in multi-family households, or in homes of single parents. A redistribution of all these people is not realistically an option,” Conisbee said.

Large family homes are tightly held and highly sought after.

Large family homes are tightly held and highly sought after.Credit:Peter Rae

“What is an option, however, is to get people into homes that are more suitable for their stage of life. A big challenge with getting older people into smaller and presumably cheaper homes is financial.”

Centre for Independent Studies chief economist Peter Tulip said the NSW government’s proposed stamp duty reforms would help remove some financial disincentive to downsize.

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“Tax on [property] turnover means people are in houses that don’t suit their circumstance. So, we would get a better allocation of houses if we replace stamp duty with land tax,” Tulip said.

Other measures to encourage empty nesters to downsize were building more diverse property types and removing the family home exemption from the aged pension asset test, he said.

Two-thirds of spare bedrooms were in households with a couple only, or a single person, and most of them own their own homes.

Two-thirds of spare bedrooms were in households with a couple only, or a single person, and most of them own their own homes.Credit:iStock

“They have spent the last 20 or 30 years opposing the construction of new apartments, townhouses, or retirement homes in their suburbs. So, most Sydney suburbs lack a diversity of housing types that would allow people to move to a more appropriate housing, while maintaining their social networks.

“They want to move somewhere nearby, but they’ve prevented all the housing alternatives that would give them that option.

“The exemption of the family home from the aged pension test also exacerbates this [spare bedrooms and empty nests]. It should be removed.”

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Impact Economics and Policy lead economist Angela Jackson said there was a clear mismatch in homes and households.

“We clearly have a number of people in houses with an excess number of rooms; either they’re staying in the family home or entering retirement. Then on the other hand, we have people living in crowded rooms,” she said.

“It’s not a good allocation of housing if you have some people in overcrowded homes and then people with spare bedrooms.”

But Demographics Group co-founder and demographer Simon Kuestenmacher said people should be able to choose how to live.

“You could soften the housing affordability crisis, or eradicate it completely, at least theoretically, by shifting empty nesters from their four-bedroom house into an apartment and a family into the house,” Kuestenmacher said. “But that is of course not what we’re doing.”

He said many delay downsizing because older Australians prefer to age at home rather than enter an aged care facility.

“Australians downsize when the family home becomes a nuisance to manage, or becomes a physical hazard, or once mum has had a fall.

“Starting in the late 2020s, we’ll see baby boomers at scale reach the downsizing phase, the peak of this would be around 2037.”

He said until then state governments needed to build much more medium density akin to cities like Paris, London, or Berlin.

“We either have skyscrapers or we have something that looks like suburbia.”

correction

This article has been updated to correct an earlier edition which stated: “Other measures to encourage empty nesters to downsize included removing the family home from the aged pension asset test”. It should have read:  “Other measures to encourage empty nesters to downsize included removing the family home exemption from the aged pension asset test.”

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