A large proportion of Generation X and Ys are poised to inherit a record number of housing estates from their veteran and baby boomer parents over the next 15 years as part of an unprecedented intergenerational wealth transfer, according to a new report.
A whopping $407 billion worth of housing assets is projected to be inherited by Australians over the next 15 years. That's one in ten homes owned by households potentially be given away by 2025.
"This represents an unprecedented baton change in intergeneration wealth, the likes of which we have never seen before," said Bankwest Retail CEO Vittoria Shortt. "The Veterans and Baby Boomers have ridden a rising tide of property prices over recent decades and are now sitting on housing assets worth around $1.5 to $2 trillion."
The Bankwest Inherited Housing Report 2010 also expects the number of estates with housing assets to increase by 95% by 2025. In 2009 there was an estimated $16bn of housing inheritance and the report shows this could increase to $31bn a year by 2025.
The analysis is based on ABS census data on home ownership by gender, age group and statistical division; ABS life expectancy data by state and age; and Residex median house prices by statistical division.
Shortt noted that Australia's capital cities are likely to see the biggest gains from housing inheritance over the next 15 years. Projected housing inheritance is highest in Sydney ($113bn), Melbourne ($86bn), Brisbane ($33bn) and Perth ($33bn).
Outside of the capital cities the biggest inheritance is projected to be on Queensland's Gold Coast ($12bn) and the Hunter region of NSW ($11bn), both popular retirement destinations.
Projected inherited housing wealth over the next 15 years amounts to around 12% of the value of total Australian household's housing assets of $3.5 trillion according to the Bankwest report.
Other interesting facts from the Bankwest report:
- The value of Australia's housing stock is $3.5 trillion.
- NSW is projected to have 38% of national housing inheritance ($155bn) over 2010-2025.
- WA is projected to see a sharp rise (116%) in housing inheritance over the next 15 years.
- There has been a 58% rise in the number of over 65s over the past 20 years to 2.9 million.
- Nearly 3 million dwellings are owned by over 50s.
- There are higher owner occupation rates for over 50s (81%).
- The number of estates with housing assets for inheritance i.e. passed to the next generation and the value of inherited housing wealth has been calculated by projecting the number of singlehome owners that pass away each year and looking at the average value of their properties.
Projections have been made at a national and state level and for 60 statistical divisions across Australia.
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