So it’s 1946 and we’re about to see the largest increase in birth rates the country has seen for some time until 1965, during which roughly 5.5 million Aussies were born.
Post the depression and war, our guys and gals got together and lovingly created what we now know as the Baby Boomer generation. The Boomers have been known throughout history to be a real bunch of trend setters, not just because of their teenage antics throughout the swinging ’60s and ’70s, but due to the sheer size of the cohort and their housing preferences they have had an impact on property markets worldwide.
Now when you think about it logically, most of us aspire to live the great Australian dream and buy a property one day, a house with a yard would be good, and while it’s not always the first property you buy, it is often a house that was home to the Boomers and their growing families.
Fast forward 55 years and you’ve now got a group of people that are 55 to 74 years old, have already or are near to exiting the workforce and typically own their homes. I’m sure you’ve got a fair idea about what happens next…
Well, it’s not as obvious as you might think, given the rising costs of living and aged care options that are now available, we’re seeing more and more Boomers simply stay put.
Let’s say you were hanging up the shingle and putting yourself out to paddock (retiring), one of your first thoughts might be around whether you have enough money/assets to live out your retirement years.
We don’t discuss financials, but often we see clients factor in the value of their home as part of their retirement strategy and you get the call, “Hey, Chris, can you come over and tell me what the house is worth?”
So, we establish what the house might be worth and then you start to wonder where you’re going to live if you did sell; a luxury apartment, over-55s resort, buy some wheels and do the grey nomad thing or just plain old downsize to a run-of-the-mill apartment. Let’s be real about it: you’re going from a house to something smaller and while you’re wanting something cheaper to put some cash in your pocket, you’re probably not wanting to jeopardise your lifestyle.
This is where it gets tricky. When you’re then looking at apartments in and around where you already live, often we find that the price variance between large-ish or luxury apartments that downsizers typically go for are not all that much cheaper than the houses they’re moving from when you factor in all the costs.
So, is it worth it?
Well, not always, and that’s why we are seeing an increase in the number of Boomers that are choosing to “age in place” which has had a flow-on effect in the property market’s supply.
As a direct result of less detached homes coming to market, there’s essentially less people upgrading because there isn’t the supply to do so, house prices have typically held fairly strong in recent times and are continuing to rise in capitals due to low supply in contrast to apartments in the same markets.
With more and more apartments being delivered in metro areas to meet demand, we are fast moving towards a unit economy in the big cities whereby the great Australian dream hasn’t been lost, it’s just become more realistic to consider apartment living.
So, when you’re wondering why there’s not the same volume of property on the market compared to past years, I guess you need to ask yourself the question: Is this the new normal?
By Chris Orr, director, residential, at Savills Australia