We're unwilling to buy new houses because we're worried about losing our jobs and falling house prices – that's the word from the Reserve Bank. The minutes for the RBA's May meeting have been released, noting demand for housing finance had eased in the past few months and prices continued to decline. The RBA reports there's little prospect of an imminent recovery in housing construction.
Taking a look at the demand for housing finance, the total value of dwelling finance commitments fell 0.5 per cent in March compared with the month before, seasonally adjusted according to the Australian Bureau of Statistics. The number of home loans to owner occupiers rose 0.3 per cent for the same period. The proportion of first home buyers fell to 16.4 per cent of the market, with the downward trend continuing.
Finally, the government says the family home is safe, but experts are exploring new ways to fund Australia's growing retirement costs. According to James Frost's report in The Australian, 1.5 million baby boomers will retire in the next decade, and 80 per cent will rely on the aged pension for at least part of their retirement income. 55 per cent will be on the full pension. Michael Rice, chief executive of Rice Warner actuaries says homes valued at more than $1 million shouldn't be exempt from means tests for the aged pension. He points to Sydney's exclusive suburbs, such as Mosman having meals-on-wheels services because there are cash poor, asset rich widows living in multi-million-dollar mansions. And although he's adamant he doesn't want to push the elderly out of their homes he asks, if someone can afford to fund their retirement, shouldn't they contribute? His proposal includes scrapping part pensions and excluding retirees with more than $250,000. Another suggestion is for governments to place a caveat on homes worth more than $1 million. When the property is sold, the government would presumably be first in line to be repaid the money outlaid in pension payments.
