John McGrath - Baby Boomer Wealth Underpinning Property Market

In many ways, it is counterintuitive that the market is showing such resilience despite 13 interest rate rises and a range of economic headwinds around the world. But if you’re out there attending auctions at the moment, you’d say the market is remarkably strong, and data has backed that up, with most areas experiencing moderate to significant price growth over the past 12 months.

Australia is a very lucky and rich country where one of the biggest demographics is baby boomers, who have done spectacularly well out of property over their lifetimes. Australia's baby boomers were born between 1946 and 1966 during the post-war economic boom. At the time of the 2021 Census, more than one in five Australians were baby boomers, and home ownership among them was very high at more than 75%.

Most of them have seen their homes increase in value by four or five times over the long term, and that’s created remarkable wealth for their retirement. Many no longer have mortgages, so rate rises don’t hurt them – in fact, they help them by giving them higher interest on their cash savings.

On top of that, baby boomers are also starting to inherit their parents’ assets, so I think there’s a huge amount of wealth concentrated within this group, and I believe it’s one of the reasons why the property market is holding up so well. It’s also why consumer spending isn’t flatlining in today’s inflationary economy. Customer spending data from CBA published in November 2023 showed spending per capita was higher than the rate of inflation in only one age group – those aged 70 years and over.