Gen Y and baby boomers are considered to be on opposite ends of the generation spectrum. These two demographics are at completely different lifestyle stages, and as a result have varying opinions and approaches towards most things in day to day life.
The Australian property market is no exception; Gen Y and baby boomers have different motivations to break into the market, preferred types of property and highly diverse ways to be sold to. However, these two groups do share one key characteristic- both have a large impact and influence on the state of Australia’s property market.
Generation Y (born 1981-1995)
Everyone always has a lot to say about Gen Y – and often it’s not positive. This generation has been called ‘lazy’, ‘self-entitled’, ‘demanding’, and everything else under the sun. Many people’s opinion is that when it comes to property, Gen Y goes by the same approach that they supposedly have towards job hunting; unmotivated and not willing to work to get what they want. However, in spite of their bad press, research has shown that a large percentage of Generation Y is wholly positive about entering the property market, and is willing to do whatever it takes to get there. This generation is growing older and settling further into their careers, and subsequently feeling financially confident. Research by the Housing and Accommodation Support Initiative (HASI) found that Gen Y are the most positive about housing affordability in Australia, which is largely attributed to their optimistic outlook on their finances. There are also other more recent incentives such as the First Home Owner Construction Grant, and all time low interest rates which are contributing to Gen Y’s increasing willingness to buy into property. While this generation still possess a strong presence in the rental market (with over 50 per cent of homes aged 25-34, renting in 2011) this is less to do with laziness, and more closely related to changing values. Unlike their Baby Boomer parents, Gen Y are more career driven, and often delay marriage and having children until their early 30’s. Furthermore, with travel being more affordable, this demographic is often choosing to spend their money on seeing the world, rather than being tied down to a mortgage.
Baby boomers (1946-1965)
As the rich kids of the property industry, baby boomers are undoubtedly one of the key dynamics shaping the Australian property market. This cohort represents 25 per cent of the population but holds over 50 per cent of Australia’s housing and financial assets. Unlike their Gen X and Y proponents, boomers were married in their early 20s, and subsequently bought into home ownership early on. They are established as the richest generation, having cashed in on several property booms, as well as free tertiary education. Baby boomers were also fortunate enough to experience dramatically cheaper housing prices; for instance, in 1978, when a baby boomer aged 60 would have been 25, the median house price in Brisbane was $29,500. Since then, the median house price has increased to $515,000. However, it hasn’t necessarily been an easy road for the boomers; although part of a couple they were often subsiding on a single income, and the average annual wage was $10, 869 in 1978 compared to the average $69, 992 in 2012 (Data courtesy LandMark White Research). The boomers have also been through three major crashes, the most recent of which (GFC) has been touted by some as the worst yet. Now the baby boomer is back with a vengeance. They want to make up what was lost the last few years to retire in the style they are accustomed. In saying this, many of this generation will continue to work past the age of 65, due to choice and necessity, and not all will conform to the stereotype of a privileged owner occupier enjoying a leisurely retirement. However those that are will be looking for points of difference and where they want to be for the next 20-30 years. For some, it will be their last home so they want to get it right.
And the winner is…
As the Australian market continues to perform strongly, baby boomers and Gen Y will both make their mark on the property industry at different times. While the baby boomers are currently the biggest influence on the market today, Generation Y will become a substantial element of the residential market over the next five years, and must not be continually underestimated in their buying power. Both of these demographics are entering very different life stages, and property is a big part of what comes with this.