AHURI BRIEF

Property dominates wealth of retired mortgagees

Examining differences in wealth accumulation strategies post-GFC

Last updated 4 November 2019

The wealth portfolios of older retired mortgagors (i.e. aged over 55 years) is dominated by holdings in property—both the family home and investment properties—(an average of $934,000 or 59.2% of all assets) and superannuation ($433,000 or 27.4%). The family home accounts for, on mean average, $663,000 or 42.0 per cent of all assets.

AHURI research shows that the average gross real wealth of older retired mortgagors increased between 2002 and 2010 to $1.6 million but remained stagnant between 2010 and 2014 (the post-GFC era). The research also identified that there are noticeable differences in the wealth accumulation strategies adopted by older mortgagors who continued to increase their savings in superannuation post the GFC and those who reduced their superannuation.

This ‘reducing’ group seem to be reorienting their portfolios toward property. While their average superannuation balances tumbled from $471,000 to $271,000 (a 42% decline) between 2010 and 2014, property holdings actually increased slightly from $798,000 to $810,000, and their property debt dropped from $177,000 to $143,000. As a result, their average equity stake in property rose from $621,000 to $667,000 (a 7% increase), with the average equity in their primary home rising by 5 per cent and by a stronger 16 per cent in other property.

This analysis shows clear evidence that, post the GFC, superannuation and property are substitutes in retirees’ wealth portfolios.

The property wealth strategies of those continuing to accumulate savings in superannuation are the opposite of those drawing down superannuation balances over the timeframe 2010–2014. Older mortgagors who grew their superannuation balances typically reduced equity stakes in property holdings (while also reducing property debt).

Table 1: Mean asset and debt values of retired mortgagors aged 55+ (in $2016) 2010–2014

 Reduced superIncreased super
 2010 (% of total assets)2014 (% of total assets)% change2010 (% of total assets)
2014 (% of total assets)
% change

Assets

      
Superannuation

$471,000 (31.7%)

$271,000 (21.2%)

-42.5%

$314,000 (18.2%)

$566,000 (31.1%)

80.3%
Property assets

$798,000 (53.7%)

$810,000 (63.3%)

1.5%

$1,133,000 (65.8%)

$1,036,000 (56.9%)

-8.6%
Primary home value

$610,000 (41.0%)

$599,000 (46.8%)

-1.8%

$740,000 (43.0%)

$715,000 (39.2%)

-3.4%
Other property value

$188,000 (12.6%)

$211,000 (16.5%)

12.2%

$393,000 (22.8%)

$321,000 (17.6%)

-18.3%
Business assets value

$45,000 (3.0%)

$8,000 (3.0%)

-82.2%

$92,000 (5.3%)

$22,000 (1.2%)

-76.1%
Bank balance

$33,000 (2.2%)

$41,000 (3.2%)

24.2%

$37,000 (2.1%)

$55,000 (3.0%)

48.6%
Financial instruments

$95,000 (6.4%)

$92,000 (7.2%)

-3.2%

$107,000 (6.2%)

$105,000 (5.8%)

-1.9%
Other assets

$43,000 (2.9%)

$57,000 (4.5%)

32.6%

$39,000 (2.3%)

$38,000 (2.1%)

-2.6%
All assets

$1,487,000 (100%)

$1,279,000 (100%)

-14.0%

$1,722,000 (100%)

$1,822,000 (100%)

5.8%
Debt      
Property debt$177,000$144,000-18.6%$233,000$204,000-12.4%
Primary home debt$139,000$106-23.7%$173,000$148,000-14.5%
Other property debt$38,000$37,000-2.6%$60,000$57,000-5.0%
All debt$202,000$157,000-22.3%$262,000$219,000-16.4%

This brief is based on AHURI Final Report 319: Mortgage stress and precarious home ownership: implications for older Australians. View the report.