March 5, 2014 by Craig Pontey
In my last post I looked at a trend where increasing numbers of parents are buying homes for their kids as an investment or a place to call home. Now I would like to look at the other side of this trend, which is when mum and dad move house. As the baby boomers become empty nesters many are going to sell-up and this trend is already having a very big impact on real estate markets. And in a mature demographic like Sydney’s Eastern Suburbs even more so.
The lifestyle choices that baby boomers are making is helping to drive demand for new apartments, holiday homes and smaller homes, and in some markets this trend is being frustrated by a lack of stock because of ridged planning controls. The trend is also driving design trends and with many baby boomers looking to stay local, and as a result some areas like Double Bay are being given a new lease of life underutilized retail strips are being re-developed with mixed use projects.
Baby Boomers In The Drivers Seat
Some of the facts surrounding this sector of the market make compelling reading; in Australia there are about 4.7 million baby boomers and according to figures published in the Australian Financial Review 40% intended to downsize from their existing homes, and this will put around $500 billion with of property on the market over the next few years. That represents about 11% of the total market and so it’s a trend we need to take notice of.
In NSW some 58% of these same boomers own their own homes, nationally they control 40% of Australia’s wealth and by the age of 65 years 90% will be living alone with no children under the same roof. Another very interesting fact, and one I will return to is the fact that 95% of females aged 60-65 who own their homes, own them outright. So we have a very selective and in some cases influential set of property owners and currently in our local market these buyers only have limited choices.
A Local Change, A Cruise or A Holiday Home
As boomers, in particular those with a high level of financial security and mobility plan their post work lifestyle they have some varied options. It is easy to notice how the travel sections of our weekend papers are promoting high end travel with luxury chartered planes and luxury escorted holidays clearly aimed at the boomers, and these same buyers are also active in the holiday home market, but for many a key aim is to down-size in the local area. They are driving demand for fashionable areas with established facilities including parklands and cafes, and this trend is also having an influence on design trends.
Boomers are looking at apartment projects that can deliver better design and they look for smaller individual lobbies, good secure parking and storage, quality appliances and larger bedrooms, and all in areas they know. Clearly when you consider how important these items are you can, I think see the influence of the female buyer, they are looking for slick interiors and given the figures I quoted earlier we should be taking notice of these trends.
Another influence in this area that I think we need to keep in mind is the influence of Asian Baby Boomers, this group is very active in the home and apartment market, and we already know that currently some 50% of buyers are from off-shore. While local baby boomers might have their own requirements, many Asian buyers are also attracted by international brands and this may well be a factor in the rise of Bondi Junction and Double Bay as the demographics of these areas start to change.
The boomers are clearly a force that is going to directly impact our local market for some time to come, as they both plan for their kids futures and also their own housing and lifestyle options, after all even the best holidays eventually end and its time to come home, and for many that might just be a new home!
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