Chris Harpur understands better than most the advantages of owning property in retirement.

Key points: Chris Harpur has accessed the Pension Loans Scheme, which has allowed him to reverse mortgage his home to give him more cash

Chris Harpur has accessed the Pension Loans Scheme, which has allowed him to reverse mortgage his home to give him more cash Home owners' primary place of residence is exempt from the age pension asset test, no matter what the property is worth

Home owners' primary place of residence is exempt from the age pension asset test, no matter what the property is worth Former Productivity Commission chairman Peter Harris says Australia's tax system is biased against those who rent

Like many people of his generation, the 72-year-old has reaped the benefits of booming property prices.

He said his terrace home in the inner-Sydney suburb of Alexandria had doubled in value since he bought it in 2008.

And he is well aware many young people would kill to own a place like his.

"I get the flak," he said.

"'You baby boomers', and all that sort of stuff. But, you know, I have worked quite hard in my life.

"Nobody knew that house values would go skyrocketing."

As a self-funded retiree, Mr Harpur now receives a part pension while still owing $300,000 on his mortgage.

"Having a mortgage in retirement was a bad decision, there's absolutely no doubt about that," he said.

"There's that old saying about being asset rich and cash poor, and I think that affects a hell of a lot of people."

Chris Harpur has taken advantage of the Government's Pension Loans Scheme. ( ABC News )

Mr Harpur decided to access the equity in his home through the newly expanded Pension Loans Scheme — a reverse mortgage backed by the Federal Government.

The scheme allows people to access a government-funded loan, paid in regular fortnightly instalments, for either a short or indefinite period.

Repayment of the loan is secured against property you own and compound interest is charged each fortnight. The outstanding balance of the loan is recovered when the property is sold or from the estate after the owner's death.

"I have more cash on a monthly basis," he said.

"It's going to be amazing in the sense of having flexibility with the mortgage."

Grattan Institute economist Brendan Coates said the Pension Loans Scheme was one of the best government policy initiatives he had seen in the past 15 years.

"There is a clear need to get older Australians to use the equity in their home to have a higher retirement income," he said.

"We can't continue to have such a large asset as housing sitting on retirees' balance sheets and then not touch it at all."

Tax system 'biased' against those who rent

Once a person is retired, their house — if they own one — is treated differently to other assets.

The primary place of residence is exempt from the age pension assets test, no matter what that property is worth.

While Mr Coates supports the Pension Loans Scheme, he questions the fairness of other housing policies.

"The fact that you can own a $2 million house and still get the pension is probably unfair in a world when there are so many Australians who don't own their own homes and an increasing number who won't own their own homes in retirement," Mr Coates said.

A review of Australia's retirement income system that is currently underway has already ruled out any changes to how the family home is treated in the pension assets test.

Former Productivity Commission chairman Peter Harris said there was a "tremendous reluctance to touch this issue".

"A government should be asking that question: Are we now at the stage of public policy delivery where we should consider this question of how reasonable it is to have people who have a very, very valuable asset, not have that taken into account," he said.

"In supporting people investing in housing, we're ignoring this growing trend for people to not invest in housing and to need rental accommodation. And the tax system is biased against that."

Earlier this week, 7.30 revealed older households which owned their home were, on average, more than 20 times wealthier than similar households which rented.

Experts say the tax system and government policies strongly favour property owners and discriminate against renters.

7.30 has identified at least 40 separate grants and subsidies available to property owners across the nation.

"We've got all these supports for people to buy housing," Mr Harris said. "If we alter one, we're probably going to have to alter a lot of them."

Home ownership no longer open to all

Home ownership is now out of reach for many Australians. ( ABC News: Liz Pickering )

Last year, with property prices falling, the Labor Party went to the federal election pledging to wind back two of the most contentious tax perks for property owners: negative gearing and discounts on capital gains tax.

Deloitte Access Economics' Nicki Hutley believes if Labor's housing policies were put to the people when "the market was still screaming ahead", the election outcome may have been different.

But now the policies are dead.

"I think they've been well and truly put to bed," she said.

"It would be a very brave party that tried to put those [policies] forward now."

Former economic adviser to the Gillard government, Stephen Koukoulas, said the rejection of Labor's planned changes at the last election would make it harder for all political parties to propose tax reform in the future.

"It's very easy to create a scare campaign when people are looking to either withdraw very, very favourable tax treatment on particular investments, or they propose ideas that are going to make housing more affordable," he said.

He said there was "absolutely no doubt at all" the tax system favoured home owners and discriminated against renters.

"For owner-occupiers, any gains they have in their property are tax free. So this incredible lift in house prices, the 'OK Boomer' set who bought their houses 30, 40, 50 years ago, had multiple increases in the value of their property. It's all tax free."

Mr Coates said the need for state and federal governments to address housing affordability was more urgent than ever.

"Three decades ago, your chances of owning your own home were roughly the same, whether you're wealthy or poor in Australia," he said.

"Fast forward to today, and home ownership is really dependent upon your income.

"Home ownership is crashing amongst the bottom 40 per cent.

"It does mean that increasingly your ability to own your own home depends as much on who your parents are, as whatever endeavours that you go about in your own life."

Watch the final part of 7.30's housing special tonight.