Decoding the Great Wealth Transfer in the Sydney Property Market

Over the past few years I’ve observed that my clients are increasingly getting a much bigger leg up from the ‘bank of mum and dad’. Not just first home buyers but older families upsizing into bigger homes too.


Bob Guth from Bradfield Badger Fox has summarises the state of play as follows.


“Baby Boomers- those born between 1946 and 1965- are retiring, and that’s causing some significant changes.


As the Boomers grew up, they needed education resulting in an expansion of the university system. As they then moved into work, the workplace had to accommodate a workforce that was not just larger from population growth which was further amplified by the inclusion of women in the workforce.


Over time advancements in healthcare and medical technology led to an increase in life expectancy, and our governments began to plan for an anticipated vastly increased demand on pension and aged care systems.


This gave rise to the Superannuation System that all working Australians have to contribute to today. It also led to an enthusiastic immigration policy to ensure we had more tax-paying workers to support “the system.”


However, as the Baby Boomer bubble begins to deflate, we are on the cusp of an intergenerational change.


Within five years, all Baby Boomers will be eligible for retirement, and by 2029, the first of the Baby Boomers will reach their statistical age of death.


As they move into their golden years, they will place a significant financial burden on the younger generations.


With the average superannuation balance for 60-64 year olds being $323,000, many will eventually need to go on a pension while others will place an extra burden on our already overworked health care system.


That’s one of the reasons our government won’t be slowing down immigration – we need more young taxpayers in Australia to replace those leaving the workforce.


It is estimated that over $3 trillion will change hands within the next two decades, making it one of the most significant intergenerational wealth transfers in the country’s history. This transfer of wealth, largely tied up in property and superannuation, will have profound implications for Australia’s property market.


Baby Boomers have been the most prosperous generation in Australia’s history. They’ve benefited from a period of unprecedented economic growth, stable employment, and significant increases in property values. As a result, they’ve accumulated substantial wealth, much of it tied up in the family home, and many own their homes outright – they were bought years ago and the mortgage has long been paid off.


This wealth transfer is already providing a financial boost to younger generations, enabling them to enter the property market. ”


Perhaps the weight of that $3 trillion also explains why the recent downturn was so shortlived, why there was no ‘mortgage cliff’, and why prices are on the rise again in many areas, despite the high interest rate environment.


That’s all for week- if you have any questions please do get in touch. You can book a call with me here: https://on.sprintful.com/15min-call-with-dan-sofo


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