According to a data released from the Reserve Bank of Australia and a recent article by the Sydney Morning Herald, Australian property and the wealth derived from property is gradually being concentrated with Baby Boomers, and Generation Y and other younger Australians are finding it hard to purchase their first home or property.
The Reserve Bank of Australia referred to a trend of cashed up 50–60 year-olds – borrowing more for real estate over the past 15 years, while those under 35-year have seen a noticeable decline in home ownership.
In the recent article by the Sydney Morning Herald, Nomura International economist Stephen Roberts said, “There is a generation gap building up in the ability to access housing and the cost of servicing housing.”
But if you think Baby Boomers plan to move when retirement comes, think again. According to a recent study by leading Australian demographer Bernard Salt around 70% of baby boomers plan to stay in their current home when retirement comes. Salt predicts tough times ahead for councils contending with less affluent suburbs becoming run down and in need of repair.
This shift and concentration of wealth with Baby Boomers is no real surprise. The cost of buying a home has risen from an average income multiple of 5 in major Australian capital cities to a multiple of 8 over the last 20 years. This is a significant change. This is one of the reasons more people are now turning to companies like ours which specialise in searching for the best investment properties. Over recent years many first time buyers made the decision to forego the first home owners grant. Many recognised that renting while building a base of affordable investment properties resulted in a better outcome than utilizing the first home owners grant to help them into a bad debt situation on their Principle Place of Residence.
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