In the context of a fast-growing and wealthy economy, a red-hot market for houses is a double-edged sword. Investment properties in Australia are currently a hot commodity, and a smart purchase for the investor. The prohibitive cost of your first house, which typically locks the buyer in to a long-term mortgage at a pivotal moment in their personal life and career, is a big step for those emerging from the shorter-term mindset of youth, and acts as a milestone for many young families.
Property values are not static, as we have recently been reminded.
The decline in housing costs during the Great Financial Crisis seven years prior cast a gloom over the notion of the house as a sure bet. This shouldn’t be the case. In the seven years since, prices have not only fully recovered, but have exceeded that seen just prior to the crash by a considerable margin. Houses are being built at a notable pace in many suburbs. The influx of foreign capital and the resurgence of domestic demand have returned this market to the hallowed ground of the blue chip. But the function of the house as an investment has historically been tied to more of a nest egg then that of a suitable retirement income.
In a number of ways, then, the popularity of the reverse mortgage is a long time coming.
Perhaps seniors have become more open to shaking up their retirement with movement away from home and hearth. Perhaps it is due to the increased flexibility of retirement funds, due both to superannuation and fewer citizens relying on a fixed pension, which have a tendency to discourage downsizing. People do continue to evolve as retirement beckons.
Regardless, Australia, and in fact most of the Commonwealth with a strong housing market, has been seeking a reliable method for seniors to slowly liquidate their homes. A reliable retirement income is a valuable entity. In an age where a residence has begun to constitute a lifetime of hard work and scrupulous saving, a reverse mortgage plan allows for a smoother financial ride through the golden years, and better odds of enjoying them.