Australian baby boomers start to retire
How the housing market will see a huge rise in the property affordability dilemma? The next coming years are unfolding and we are looking at a supply and demand situation, you ‘re seeing this happening all around you as the 4 million Australian Baby Boomers start to retire.
Unlike their own parents, the Baby Boomers are not looking at settling into their retirement housing estate. Oh! No, they are more likely seeking to invest their money in property, either for long term or holiday rentals. This will see a huge shift in the demographics of holiday spots around the country like coastal areas that are now becoming high demand and we are not just talking about your Brighton Bay Street suburbs. The high demand in these areas I’m discussing is all the way from Melbourne City to Frankston coastal, to the Western water views and City skyline which has already seen property prices rise dramatically, and the local infrastructure put under pressure. There seems to be a higher demand to develop in these areas to subdivide larger blocks that are owned by the baby boomer’s parents. All along the south coastal areas of Melbourne you are seeing this happening to meet the demand of the retirees downsizing into 2 to 3 bedroom dwellings.
For over 25 years the Baby Boomers have driven our property markets, and as they retire, this trend does not appear to be changing. It is estimated that the Baby Boomers currently make up 45% of the housing market, and this is predicted to rise to 50% in the next 10 years. In 10 years’ time, there will be over 150,000 Baby Boomers reaching retirement age.
Currently there are about 4.1 million Baby Boomers, which represents an increase of 60% from the generation before them (approx. 2.4 million). What was built in the 1960’s and 1970’s to accommodate the Baby Boomers ‘parents, had to be upped by 60% to accommodate the Boomers.
Melbourne’s property demand will once again hinge on the Baby Boomers whom are still caring for their elderly parents and their children’s start in the property market, When the boomer’s children leave the nest and elderly parents are left living on their own, they are looking to downsize their home, without having to relocate. Even if only 25% downsize, this will significantly impact our property market, creating a requirement for a further 20,000 to 30,000 density dwellings a year. Medium density townhouses will be in strong demand in Melbourne.
Most young couples wanting to settle into a home will not move into apartments. In turn, this will push up the value of townhouses.
Townhouse developments are popping up every ware and you are seeing it as you drive around the suburbs. Something had to give when our government stopped the sprawl of Melbourne due to infrastructure, which gave levy to going up or building within existing infrastructure parameters and turning existing city homes into townhouse developments. This didn’t reduce the housing prices as it just supplied the already high demand of inner city living. I don’t see this slowing down either, so property will always move upwards as it has always done over the years. It’s a business formula we have always followed SUPPLY & DEMAND.
We cannot question the demand anymore as supply of housing is still struggling to keep up with our population growth as well as immigration, which helps employment security in the building industry which in turn trickles through to all manufacturing and holiday sectors here in Australia.
The building and manufacturing industry comes from our own resources, from coal for steel to cement plastics, polymers and glass from sand. Creating a solid industry here in Australia, which you would think would balance out this dilemma if wages crept up with housing prices. This is getting harder to achieve as demand also increases land value and our farmers are waiting to make their millions.
The bubble burst is coming? I have read this in the papers as well as seen it on TV but year after year it hasn’t happened and it may slow it down, putting fear in people’s heads, but picks up again a few months later.
Australian baby boomers start to retire