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Property wealth war: Gen X takes the top spot while Millennials lag behind
Gen Xers have amassed the largest property portfolio net worth and established themselves as the leader of the generational race, with Millennials left struggling to get off the line.
According to the latest analysis of the Australian Bureau of Statistics (ABS) and census data by KPMG, Gen Xers have the largest property wealth portfolio, closely beating Baby Boomers, while Millennials have fallen far behind.
With an average dwelling and land value of $1,455,000, Gen Xers lead the way, while Boomers have developed a portfolio worth $1,360,000, and Millennials are yet to break the $1 million mark.
KPMG urban economist Terry Rawnsley said a major reason for the shift in the generational race for wealth was Baby Boomers handing down the wealth they have built.
“The great wealth transfer is in full swing, as Baby Boomers start downsizing properties and moving that wealth into cash,” Rawnsley said.
“They are also beefing up their super accounts as they begin to spend in retirement or hand down wealth to their children.”
“This has meant Gen X is atop the mantle as the wealthiest property owners.”
Rawnsley said the value of Millennials’ properties was lower as they were still heavily burdened by debt.
Property has remained a key factor in wealth generation, and Rawnsley said the data showed that younger generations were at a clear disadvantage when entering the market.
“For young Australians able to get into the market, they are starting to see strong growth, but for those aged under 30, many of whom have been locked out of housing, wealth accumulation will be a much tougher task,” Rawnsley said.
“Many young people in this group are just entering the housing market, which leaves them with large mortgages.”
“When combined with HECS debts, this makes them the most leveraged generation.”
He said that those who had been lucky enough to enter the property market before interest rate hikes and the COVID-19 price boom were well-positioned and had experienced significant growth in their purchases.
“However, with interest rates now at much higher levels, that home ownership window is now firmly closed.”
Rawnsley said that younger generations would likely have to consider alternative ways to generate wealth.
“With many young people locked out of the housing market, we may see more of this generation focus on share portfolios as a more accessible way to build wealth,” Rawnsley concluded.