Expert Says Two New NSW Cities Needed to Avert Growing Rental Retirement Crisis

A finance broker has warned that Australia may need to build two new cities in New South Wales to head off a mounting rental crisis that could force millions of retirees to spend their superannuation on rent.

Recent research and industry analysis project a 202% increase in the number of Australians aged 65 and over who will be renting in retirement by 2056, rising from about 1.37 million today to roughly 4 million. Analysts say the trend is driven by decades of housing unaffordability, particularly in Sydney, and could increase pressure on the age pension as retirees deplete their savings to meet housing costs.

Mansour Soltani, a finance broker with more than 20 years' experience in the property sector, told media outlets that dramatic policy and infrastructure shifts would be required to reduce demand pressures on Sydney. "They would need to build new cities with great transport into the city," he said, adding that two new tech-focused hubs in New South Wales could draw jobs and workers away from Sydney and ease housing demand.

The financial implications for renters are stark in high-cost markets. In Sydney, a reported median rent of $1,085 per week equates to about $56,420 a year, an outlay that industry commentators say continuously erodes retirees' savings while homeowners preserve wealth through property ownership. The Australian Retirement Foundation's referenced figures for living costs show couples who own their home require an estimated $49,992 a year to live a "modest" lifestyle at retirement, while renters need around $66,296 a year for the same standard, taking into account future receipt of the age pension.

Analysts cited variations in home-ownership rates as a key factor. If ownership proportions had remained at their 2016 peak, forecasts suggest only 2.2 million Australians would be renters at retirement by 2056. Sustained increases in property prices since then are expected to add roughly 1.8 million more people to the rental-retiree cohort, research indicates.

Industry bodies and brokers warn that an expanded cohort of rental retirees will both deplete private retirement savings and raise demand for public support. A buyersagent.com.au analysis cited in recent reporting projects the economic strain from retirees exhausting their superannuation and increasing reliance on the age pension.

Financial strategists say broader economic factors complicate the picture. Gareth Croy, managing director at Your Future Strategy, said policymakers face an unprecedented prospect of a generation becoming lifelong renters. Croy noted that earlier in 2025 there were three interest-rate cuts and another quarter-point cut was forecast for November, moves that could increase borrowing capacity for first-home buyers. "As interest rates come down and more buyers enter the property market, house prices do go up as a result of that increased interest so it's a double-edged sword," he said.

The housing squeeze is reflected in personal stories from younger Australians attempting to buy. A western Sydney couple in their late 20s said they moved back in with parents to save, describing the strain of trying to both rent and save for a deposit. A Sydney electrician in his late 20s and his partner, despite combined earnings above $200,000 and $110,000 saved, said they found the market out of reach and were considering moving overseas if they could not buy by the end of the year.

Soltani, who has invested in property since 2000, pointed to changing investment returns as another potential market response. He said rental yields have fallen from around 6–7% two decades ago to about 2.5% now, and predicted some investors may shift away from property toward equity markets or other asset classes to build retirement wealth. He suggested strategies such as salary sacrifice into superannuation or investing in shares to compound wealth and potentially enter the property market later in life.

Policy responses put forward by industry participants range from large-scale urban development to targeted housing supply measures. Soltani argued that creating new employment nodes and transport links could redistribute demand, but acknowledged such initiatives would require substantial government planning and investment.

Economists and retirement specialists emphasise that the combination of rising rents, slower home-ownership uptake and the finite nature of superannuation savings will make housing affordability a central issue for retirement policy. Without policy change or significant increases in affordable housing supply, the projected increase in rental retirees could heighten pressure on public pensions and reshape retirement experiences across income groups.