Experts say Australian retirement plans are determined by real estate because tax incentives in the tax system can make housing affordability worse. According to the latest report from the Australian Housing and Urban Research Institute, by 2014, 30% of Australians have a second home when they retire, compared with 25% in 2002.

Although retirees have more properties, the proportion of family housing in retirement wealth has fallen from 46% to 39%. In the same period, the proportion of investment real estate in retirement wealth rose from 9% to 15%. Stephen Whelan, an associate professor at the University of Sydney, is the lead author of the paper. He said that current tax policies encourage retirees to use real estate as a retirement strategy, and the impact can be seen in the real estate market.

Whelan said: "In the tax system, self-occupants receive more generous treatment, and the motivation to accumulate wealth in the housing sector is implicit." "We provide opportunities to use existing properties and accumulate real estate, which gives Housing prices are putting pressure."

The study analyzed data collected by the Australian Family, Income and Labor Dynamics (HILDA) from 2002 to 2014 and found that older Australian families are less likely to sell their investment properties in order to qualify for pensions.

According to pension standards, family housing is considered a tax-free asset, but homeowners can hold $250,000 in non-tax-exempt assets, such as investment properties, and then cut pensions. Whelan said that although investing in real estate is no exception, other incentives have prompted retirees to buy real estate. Whelan said: "The provisions on negative tax deductions and indirect pensions may encourage people to buy a second home as a retirement strategy."

Shane Oliver, chief economist at AMP Capital, said retirees might think that the benefits of investing in a property are greater than the loss of a pension.

Dr. Oliver said: "Australians seem to believe in the story of real estate. They are not worried about losing some or all of their pensions."

He said that investing heavily in real estate makes retirees more vulnerable than ever because they may be affected by fluctuations in the real estate market.

Brendan Coates, a researcher at the Grattan Institute, a public policy think tank, said that US preferences for real estate investment and tax incentives for investors are worsening housing affordability.

Coates said: "They (retirants) often save more than they need and bequeath their property to the next generation." He added that this trend may lead to increased inequality and exacerbate the housing crisis.

He believes that the federal budget proposal to extend the pension loan program to all retirees is a good move for older Australians who want to care for themselves in their own homes and address inequalities in the coming years.

According to the AHURI report, the age of the pension can be changed to a more “term neutral” rather than a retirement income system that is more likely to have a home.

Welan questioned whether the current tax setting has reached the right balance in terms of fairness and equity.

He said: "If a renter has $1 million in a bank, there will be no pension. But a person with a million dollar house will be eligible for a pension," Mr. Whelan said.