Seniors groups have slammed suggestions that older Australians should move out of their homes to make way for younger families as "offensive" and "ludicrous," while pointing out there are many practical reasons why older people stay in the homes they set up decades ago.

This follows a report released on Monday that found unless older Australians living in inner city Sydney and Melbourne downsized, "they will be occupying much of the existing stock of detached houses" where there will be strong demand from young families.

Census data shows 50 to 60 per cent of freestanding houses in the inner and middle suburbs of the two cities are occupied by Australians aged 50 or over.