¹ For a more wide-ranging discussion of housing of the aged in Australia, see Kendig, H. Housing and living arrangements. In: Howe, A. (ed.). Towards an Older Australia: Reading in Social Gerontology, University of Queensland Press, St Lucia, 1981, pp. 84–101.Google Scholar A more detailed analysis of Australian policies and recommendations for action is provided in Kendig, H.The cumulation of inequality: housing costs and income support in old age, Australian Journal of Ageing, 3, 1 (1984 a), 8–15.CrossRefGoogle Scholar

² Australian Bureau of Statistics, unpublished results from the 1980 Survey of Retirement and Income, Canberra, 1981.

³ The maximum pension rate for married individuals, in May 1981, was 17.6 percent of the average weekly earnings of all male employees. For comparisons with Britain, the United States and other comparable countries see Kaim-Caudle, P., ‘Cross-National Comparisons of Social Service Pensions for the Elderly’. The University of New South Wales, Social Welfare Research Centre, SWRC Reports and Proceedings Number 14, Sydney, 09 1981.Google Scholar

⁴ Source: unpublished data from the 1981 Census.

⁵ Kemeny, J., The Myth of Home Ownership; Private and Public Choices in Housing Tenure, Routledge & Kegan Paul, London, 1981, p. 9.Google Scholar

⁶ These cross-sectional figures are only illustrative of the actual rise ofhome-ownership rates as particular cohorts grow older. They are confirmed, however, by more detailed analyses: the rises of owner occupancy between 1971 and 1981 were 14 percent for those aged 25 to 34 years in 1971, 7 per cent for those aged 35 to 44, and only 4 per cent for those aged 45 to 54.

⁷ For Australian evidence see Kendig, H.Housing careers, life cycle and residential mobility: implications for the housing market. Urban Studies (1984 b)CrossRefGoogle Scholar (forthcoming); for British evidence see Murie, A., Niner, P. and Watson, C.Housing Policy and the Housing System, George Allen and Unwin, London, 1976Google Scholar; and for American evidence see Speare, A., Goldstein, S. and Fry, W. H. Residential Mobility, Migration and Metropolitan Change Ballinger, Cambridge, Mass. 1974.Google Scholar

⁸ Kendig, H.New Life for Old Suburbs, George Allen and Unwin, Sydney, 1979, pp. 109, 125.Google Scholar House prices elsewhere in Australia generally are lower than in Sydney but overall increases over the post-war years have followed similar trends.

⁹ Neutze, M.Urban Development in Australia, George Allen and Unwin, Sydney, 1982, p. 156.Google Scholar In addition to overall rises of interest rates, there was a substantial shift from low-cost lenders such as banks to higher cost lenders such as building societies and finance companies.

¹⁰ Kendig, , 1981 b, op. cit. p. 155.Google Scholar Also see Committee of Inquiry into Housing Costs, The Cost of Housing, Volume 1, Australian Government Printing Office, Canberra, 1978, p. 54. Although mortgage interest rates have remained low in real terms, that is, below the rate of inflation of housing and other prices, their high absolute levels nonetheless proved to be a substantial barrier in gaining access to buying for the first time, especially when combined with the rapid house price inflation during the early 1970s.

¹¹ I am grateful to Max Neutze for clarifying the ideas in this paragraph on the impact of inflation on changing real costs of housing.

¹² For a description of post-war housing policies see Neutze, M.Australian Urban Policy, George Allen and Unwin, Sydney, 1978, pp. 92–115.Google Scholar

¹³ The source here, and elsewhere in the text unless otherwise noted, is a survey of 1,050 older people carried out in late 1981. Details on the survey are available from Rowland, D. T., Kendig, H. L. and Jones, R. G., Improving efficiency and coverage in a survey of the aged, Australian Journal on Ageing (1984)CrossRefGoogle Scholar, (forthcoming).

¹⁴ Class is defined as the main occupation for men, the main occupation of the husband for ever married women, or the main occupation of never married women. ‘Professionals and managers’ also include executives, administrators and technical and related workers; ‘working classes’ include transport and communication workers, tradesmen, production-process workers, labourers, and service, sport and recreational workers.

¹⁵ Social Trends 11, HMSO, London, 1981.

¹⁶ In contrast to Australia and the United States, most of the post-war increases of home ownership in Britain occurred after 1960. Kemeny, , op. cit. p. 6.Google Scholar

¹⁷ Age Concern England, Profiles of the Elderly, 7, Their Housing. London, 1980, p. 10.

¹⁸ See Social Trends, op. cit. p. 147, for figures on tenure and age in Britain.

¹⁹ For a review of post-war housing policies in the United States see National Commission on Urban Problems, Building the American City, Washington D. C., 1968.

²⁰ For American figures see Struyk, R., and Soldo, B.Improving the Elderly's Housing: A Key to Preserving the Nation's Housing Stock and Neighborhoods, Ballinger, Cambridge, Mass., 1980, p. 39.Google Scholar

²¹ Age Concern, op. cit. p. 23. In the Sydney survey, 41 per cent of older owners had received lump sum superannuation benefits.

²² Because the current generation of older owners bought when interest rates were much lower, the costs of buying were distributed more evenly over time and the financial obstacles were smaller. In contrast to the United States, both Australia and Britain have lenders who typically offer variable interest rate loans, which increases payments for established owners as well as new purchasers when interest rates rise. Established buyers, however, can sometimes lengthen repayment periods rather than increase payments, and the interest rates apply to outstanding debts which are relatively small for those who have been buying for some years.

²³ Kendig, , 1979, op. cit. pp. 109, 125Google Scholar; Neutze, , 1982, op. cit. p. 159Google Scholar; and Murie, A. and Forrest, R.Wealth, inheritance and housing policy, Policy and Politics, 8, 1, (1980), pp. 1–19.CrossRefGoogle Scholar Prices have been rising more slowly, however, in older inner city areas in the United States and Britain where relatively low income households would have been buying. This contrasts sharply with Australia, where the prices of the less valuable houses in the inner city areas have been rising relatively faster than other dwellings. Kendig, , 1979, op. cit. p. 115, 123, 155.Google Scholar

²⁴ A study of owners who sold and bought again in Adelaide during 1976 shows the importance of capital gains. Kendig, , 1981 b, op. cit. p. 95.Google Scholar Those who had owned their last home for ten or more years had an average equity of $31,500 in their former home, an amount equal to the average price of a home. Of this amount, only a quarter was stored funds - 9 per cent initial deposits, 10 per cent repayments, and 6 per cent improvements - while fully 75 per cent was attributed to capital gains as a return on the initial investment.

²⁵ These amounts include actual mortgage repayments plus estimated costs of rates and maintenance. The rate bill is assumed to be 87 weekly: the average rate bill in Sydney is approximately 814 weekly, and old age pensioners receive reductions that average 50 per cent. Pensioners Voice, September 1982, p. 4. An additional five dollars weekly is included for maintainence costs; this figure updates actual expenditure by aged owners in 1973 by later rises in the Consumer Price Index. Department of Environment, Housing and Community Development, Aged Persons Housing Survey, Vol. 2, Australian Government Printing Office, Canberra, 1976, p. 59.

²⁶ The in-kind income from owner occupancy, termed ‘imputed rent’ by economists, can be a difficult concept to understand and an example may help explain it. If a person had $50,000 and invested it in a savings account, the return at 10 per cent interest would be 85,000 annually. Alternately, if the same amount of money were invested in outright home ownership, the returns would be the in-kind income from not having to pay any rent. In both cases, the individual receives a substantial return on capital.

²⁷ Commission of Inquiry into Poverty in Australia, First Main Report, Volume 1, Australian Government Publishing Office, Canberra, 1975, pp. 15, 235.

²⁸ The figures on housing costs in this paragraph are from Age Concern, op. cit. pp. 10, XB20, 23, 24; and Hunt, A.The Elderly At Home, London, HMSO, 1978, pp. 13, 40.Google Scholar As an aside, it is interesting to note that neither of these major reports presents any information on the income of older households in different tenure categories.

²⁹ Age Concern, op. cit. pp. 13, 21.

³⁰ The figures in this paragraph are from Struyk and Soldo, op. cit. pp. 24, 55, 58.

³¹ Imputed rent on home ownership was taxed in Australia from 1916 to 1923. Commission of Inquiry into Poverty, op. cit. p. 158. However, it has never been taken into account in assessing levels of pension benefits; equity in owner occupied housing was excluded from the assets test on the pension operating up to 1973, and will be excluded in the assets test recently re-introduced by the current Labour government. While the exclusion of imputed rent from income tax has little benefit to the many older owners on low incomes, it considerably increased their savings potential prior to retirement.

Until 1976, the assets test for Supplementary Security Income in the United States did take account of equity in owner-occupied housing. Some American states do take equity in owner-occupied housing into account in assessing eligibility for medical or nursing home benefits, or attempt to recover costs from estates.

³² Department of Social Security, Annual Report 1981–82, Australian Government Publishing Service, Canberra, 1982. Until Medicare was implemented early in 1984, pensioners having certain levels of private income were excluded from receiving free medical care.

³³ Chen, Y. Taxation and treatment of income. In Scholen, K. and Chen, Y. (eds). Unlocking Home Equity for the Elderly. Ballinger, Cambridge, Mass. 1980, p. 217.Google Scholar

³⁴ The New South Wales government provides a standard $150 rebate to which particular local councils in Sydney add their own subsidies. Pensioners Voice, September, 1982, p. 4. In some cases an attempt is made to defer rates and pay them from the older person's estate. The latter programme is not a subsidy but nonetheless increases living standards through an avenue unavailable to tenants.

³⁵ Age Concern, op. cit. pp. 25, 26.Google Scholar

³⁶ Scholen, K. and Chen, Y.op. cit.Google Scholar None of the programmes that do exist provides any property tax relief to older tenants, who pay through their rents to the landlords who do pay the taxes.

³⁷ Struyk, and Soldo, , op. cit. p. 24.Google Scholar

³⁸ Ibid, pp. 195–264. Heumann, L. and Boldy, D.Housing for the Elderly: Planning and Policy Formation in Western Europe and North America, Groom Helm, Beckenham, Kent, 1982.Google Scholar

³⁹ Kendig, H., 1981 a, op. cit. p. 95.Google Scholar

⁴⁰ Struyk, and Soldo, , op. cit. chapter 7.Google Scholar

⁴¹ Department of Social Security, op. cit. p. 26.Google Scholar

⁴² Age Concern, op. cit. pp. 24, 25.Google Scholar

⁴³ Yates, J.An analysis of the distribution impact of imputed rent taxation. The Economic Record. 58, 161, (1982), 177–189.CrossRefGoogle Scholar Excluding imputed rent from taxation provides substantial benefits for older owners only when they have private incomes (see notes 26 and 31). However, its exclusion from means tests on income support benefits the aged more than the younger pensioners or beneficiaries, who are less likely to be outright home owners.

⁴⁴ An alternative interpretation is that the provision of full pensions to aged owners depletes public funds that otherwise could be directed toward more needy groups such as aged tenants, single parents, and the unemployed. Henderson, R.Criteria for Welfare: Needs or Earnings? Australian Journal of Social Issues, 12 (1977), 100–109.CrossRefGoogle Scholar Such a strategy overlooks the progressive redistribution that occurs from middle-aged to older owners under the current system.

⁴⁵ Kemeny, , op. cit.Google Scholar

⁴⁶ Sussman, M., The family life of old people. In Binstock, R. and Shanas, E. (eds). Handbook of Aging and the Social Sciences. Van Nostrand Reinhold, New York, 1976, P. 233.Google Scholar

⁴⁷ Annuity programmes, as advocated by the Australian Commission of Inquiry into Poverty op. cit. p. 225, would enable older people to remain in their homes while capitalising the equity. However rational such programmes may be, they are decidedly unpopular among older Australians, who either are unaware of them or wish to leave all their assets to their children. Similar programmes have been developed in Britain, with similarly unenthusiastic responses. Fogarty, M. Removing Poverty. In Hobman, D. (ed.). The Impact of Ageing: Strategies for Care, pp. 76–77.Google Scholar The American experience, and detailed proposals for a variety of such schemes, is thoroughly considered in Scholen, and Chen, , op. cit.Google Scholar

⁴⁸ Murie, and Forrest, , op. cit. p. 7.Google Scholar

⁴⁹ Scholen, and Chen, , op. cit. p. 263.Google Scholar

⁵⁰ The estimate of the amount of equity in housing inherited from older people's estates was calculated as follows. First, the home ownership rates of widowed, divorced, and never married older people, as identified by the 1981 Sydney survey, was multiplied by the number of deaths of persons in these marital groups throughout Australia during 1982. The source for information on death rates is Australian Bureau of Statistics, ‘Deaths in Australia, 1982’, catalogue number 3302.0, Canberra, 11 November, 1983. Deaths of married owners were excluded, on the assumption that their estates were left to surviving spouses. Second, the number of the deceased owners without spouses was multiplied by an estimated average equity in the home of 850,000. This amount is considerably below the average value of an owner occupied house in Australia, because older people tend to live in less valuable housing and some may have had outstanding mortgages. These calculations yield a final estimate of $2,154,600,000.

⁵¹ Horsman, E. G.Inheritance in England and Wales: the evidence provided by Wills, Oxford Economic Papers, 30, 3, 11 1978.CrossRefGoogle ScholarHarbury, C. and Hitchens, P.Inheritance and Wealth Inequality in Britain, George Allen and Unwin, London, 1979Google Scholar, Sussman, , op. cit.Google Scholar

⁵² The median age of death for widows aged 60 or over is 82 years. Australian Bureau of Statistics, op. cit. The Sydney survey found that the parents of this age had an average of two surviving children, whose average age was 50 years.

⁵³ American evidence shows that the value of older people's housing is closely related to their income. Struyk, and Soldo, , op. cit, p. 59.Google Scholar The Sydney survey found that half of the children of upper-middle class aged parents were also in the upper-middle classes, as compared to little more than a quarter of the children of the working class aged.

⁵⁴ Jenkins, S. P., and Maynard, A.Intergenerational continuities in housing. Urban Studies, 20, 4, (1983), 431–438.CrossRefGoogle Scholar

⁵⁵ Kendig, H. and Rowland, D.Family support of the Australian aged; a comparison with the United States, The Gerontologist, 23, 6, (1983), 643–649.CrossRefGoogle ScholarPubMed

⁵⁶ Pedrick, W.Oh, To Die Down Under! Abolition of Death and Gift Duties in Australia. Tax Lawyer, 35, 1 (1981), 113–141.Google Scholar

⁵⁷ Ibid.

⁵⁸ A strong statement in favour of such transfers is made by King, R. The dimensions of housing need in Australia, University of Sydney. Ian Fell Bequest, Occasional Paper Number 3, 1973.Google Scholar

⁵⁹ Department of Environment, Housing and Community Development, Aged Persons Housing Survey, Australian Government Printing Office, Canberra, 1976, vol. 1, P. 45.Google Scholar

⁶⁰ Under-occupancy is crudely defined as any dwelling having fewer than one person per bedroom. The source is the 1981 survey of the aged in Sydney.

⁶¹ Struyk, and Soldo, , op. cit. p. 42Google Scholar; Age Concern, op. cit. p. 30Google Scholar; and Hunt, , op. cit. p. 41.Google Scholar

⁶² The proportion of the American labour force covered by private pension programmes rose from 25 per cent in 1950 to 48 per cent in 1979. Schieberger, S. Trends in pension coverage and benefit receipt, The Gerontologist, vol. 22, no. 6, 1982, p. 475. A similar trend is shown in Britain by the rise of the proportion of employees covered by private pension schemes from 49 per cent in 1972 to 64 per cent in 1979. Social Trends, op. cit. p. 79.Google Scholar

⁶³ It is hoped that this statement will be disproved by the recently elected Australian Labor government, which is providing major increases of public subsidies for first time home buyers and construction of public housing.

⁶⁴ Kendig, , 1984 a, op. cit.Google Scholar

⁶⁵ See note 47.