Australia’s Generational Wealth Tsunami Is Incoming
In This Week’s How's The Market | Edition 85
Australia’s Generational Wealth Tsunami Is Incoming
Melbourne’s Top End Market Is Starting To Heat Up With Two Huge Listings Hitting The Market
How Many Properties Were Sold In Victoria Due To Land Tax?
Australia’s Generational Wealth Tsunami Is Incoming
Australia's millionaire population is set for a big jump over the next five years, according to a new report from UBS, a major global financial services company.
The 2023 Global Wealth Report, which analyzed data from 56 countries, shows that the world’s wealth is on the rise, and more people are moving up the financial ladder.
Right now, about 1.9 million Australians are millionaires in US-dollar terms, and the report predicts that number will increase by roughly 400,000 in the coming five years.
Who Are the Future Millionaires?
Australia’s wealth has been on the upswing for the past 25 years, thanks in large part to rising property values. Professor Roger Wilkins from the Melbourne Institute of Applied Economic and Social Research explains that this trend will continue—and not just because of real estate. According to Wilkins, there's a “wealth tsunami” on the way as baby boomers begin to pass on their savings.
A lot of this inheritance will go to people in their fifties to mid-sixties. These aren’t exactly young families who need money for mortgages or childcare costs; instead, they're more likely to be people who are already pretty comfortable financially.
What Could This Mean for House Prices?
A large majority of people who inherit money in Australia will often pour their inheritance into property.
As those predicted to inherit a lot of this money are likely to already have property in premium locations they may wish to upgrade, renovate or downsize their residence which could push property prices in already expensive areas even higher as a large quantity of people in this cohort inherit funds.
A good amount of this money will also skip this generation and be passed down to the baby boomers' grandchildren via gifts and guarantees from parents to help this new generation into the housing market which is something we often see with our clients.
What The Agents Are Saying
Every suburb is performing at a very different level.
This week I spoke to some agents from St Kilda that are selling a property in Bentleigh East.
The property they currently have on the market has had 50+ groups through in the last 4 weeks with 8 building and pest inspections and is expected to sell very well at auction next weekend.
The agents have not expected this as they tell me they have been struggling with some similar listings in the St Kilda market and can’t believe how many buyers are currently looking in the bayside market.
Upon speaking with some other agents in the Hawthorn region in the apartment market, they are experiencing the other end of the spectrum.
Telling me that apartments that need work have been struggling a lot unless they have all the qualities that buyers are looking for: balcony, northern light, good sized rooms, decent floor plan, low OC fees.
We are seeing a large quantity of these apartments hitting the market over recent weeks.
The Wow Factor!
The top of the market is starting to heat up as we enter the peak of the spring market of 2024. Check out these two incredible properties that are classic examples of Melbourne’s top-end market…
62 Clendon Road, Toorak, Vic 3142
"Cranlana" – An estate of historic significance set amidst the sprawling grounds of Toorak’s most coveted estate is magnificently situated within Toorak's largest land holding of 1.1 hectares (11,366 sqm approx.)
There has been controversy in some circles of the industry regarding the $100m price tag on this property due to the house needing a substantial renovation.
I think it is important to consider that this is the single largest land holding of residential real estate in Toorak - Melbourne’s most prestigious suburb.
This plus, it carries the family history of being in the Myer family for the last 100 years.
For these two factors alone, it is priceless and I could see an international buyer purchasing it for the above factors alone.
Price : $96,000,000 - $105,000,000
1 Edzell Avenue, Toorak, Vic 3142
Another incredible property that is back on the market, bordering the Yarra and having an impressive blend of period charm and modern architecture.
This property is well worth checking out and has to be one of Melbourne’s most impressive properties.
Price : $50,000,000 - $55,000,000
In The Media
How many Victorian investors have sold due to higher land taxes?
A very interesting read that attempts to measure the specific impact that Victoria’s land tax changes have had on investment stock.
The article estimates that an additional 5000 investors have sold due to the land tax changes and that the number of investors entering the market has also decreased.
I wonder if they thought about how these changes would affect tenants and rental prices?
Final Thoughts
As the generational wealth transfer tsunami begins, it’s my belief that the inner city blue chip property markets are going to be the ones that receive the largest jump in demand.
If you or someone you know would like assistance to buy this year in these markets, book in a call and we can discuss if we can help.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is general advice and does not take into consideration your objectives, situations or needs. Please consider if this advice is suitable for you and your circumstances and speak to a professional before making any financial decisions.
