There are four million Baby Boomers in Australia, which is nearly one in five of the population and they are starting to retire from the workforce in numbers. Like every generation before them, they will move in the years following retirement to more suitable properties, but where will they retire to?
Unlike the generation gap that they created with their own parents and older brothers and sisters by wearing miniskirts, long hair, attending protest rallies and listening to their own music, they get on well with their own children.
Although retirement will encourage many Baby Boomers to seek the clean, green and pristine lifestyle that they aspired to in their teen years and return to nature, they will want to stay in fairly close touch with their children and grandchildren.
Generation X, the children of the Boomers have adopted most of the value systems and desires of their parents and many demographers see Generation X as a sort of pale reflection of Baby Boomers.
There are already anecdotal signs that many are seeking the same lifestyles that their parents are about to achieve. Many Baby Boomers and Gen Xers have already made the decision to relocate to acreage lifestyle situations.
The more popular areas so far have been Port Macquarie, the Central Coast and the South Coast in New South Wales, the Bellarine and Mornington Peninsulas in Victoria and similar locations in other States – areas that are scenically attractive and well serviced.
Another attraction for boomers and Gen Xers is room for children and grand children to grow and play in a safe and healthy environment. Housing prices in such areas with acreage are starting to rise after many years of price declines and stagnation.
Acreage in the right locations provides the obvious solution for Baby Boomers and Gen Xers and in many cases price is not a problem. This is because the four million Baby Boomers nearly all own their own homes outright, without any debt other than used to buy other investment properties.
Not only that, but as they have upgraded several times during their years of raising families, their homes tend to be in the highest price ranges of each capital city. Cohorts invariably behave in similar ways and once a trend is established it quickly becomes the norm.
So it will be with the Baby Boomers. As they retire and their friends and associates move away, we can expect massive relocation to acreage properties especially in the following housing markets - Sydney’s Central Coast, Illawarra, South and North Coast towns with airports, Queensland’s coastal resort towns such as the Whitsundays, Melbourne’s Bellarine and Mornington Peninsula and Victorian coastal towns with airports,
South Australia’s Fleurieu and Yorke Peninsulas, and Tasmania’s coastal towns near airports. The same trend is highly likely to be established with Generation X, resulting in their exodus from high stress and high cost housing markets to the more relaxed and enjoyable lifestyles that acreage provides.
Baby boomers have caused a doubling of house prices every time they have been active in the market. Together with their children, they are turning to acreage in prime regional areas and with so many about to move into so few areas, the acreage markets in those locations are set to boom for several years.
Australia’s close affinity with land
Australians have always had a close affinity with land and a strong desire to own it. A brief journey through the nation’s history shows why, because the Australian nation was founded on the notion of the value of land.
During colonial times, land was given as a reward to retiring soldiers and to convicts when they gained their freedom. Land provided security, not only to its owners, but to the growing network of towns and ports that spread out from the early colonial centres.
Farms were self-sustaining communities which produced virtually everything needed for survival, but also provided surpluses of food and materials for town markets. The discovery of gold changed everything. Australia’s population grew dramatically during and after the gold rush years in the second half of the nineteenth century and most of the immigrants moved to the old colonial centres when the lure of gold gave out.
The wealth from gold provided capital for the development of those centres into capital cities with rapidly growing suburbs where homeownership was the norm. As the capital from gold gave out, colonial governments resorted to borrowing money from Great Britain, to fund the building of magnificent public buildings, monuments, port facilities and railway lines.
Private investors did the same to speculate in land purchases along the routes of proposed railway lines or wherever they believed new towns were to be founded.
In the Dandenongs and Blue Mountains, along the coastlines beyond Sydney, Melbourne and Brisbane, large tracts of land untouched since they were originally granted or purchased were hastily sub-divided and speculatively traded. The attraction of residential land in regional areas proved irresistible and land prices soared.
Four hundred acres of land on which the Blue Mountains townships of Leura and Katoomba in NSW are now located were purchased from the grantee in 1880 at one pound an acre after the railway through the mountains had reached Katoomba.
The land was sold at seven pounds per acre three years later and subdivided, selling in 1885 at one pound per foot with 200 feet being the street length of an acre.
This quickly rose to eight pounds per foot in 1887 and was being sold at anything from fourteen to twenty pounds per foot when Leura station opened, just before the 1890 crash. In just ten years the price of that land had increased by an incredible 4000% and this was not unusual.
Bust in 1890 followed the boom years when Great Britain’s bankers, becoming increasingly concerned by the huge amounts of money being lent to colonial governments and private investors, turned off the tap.
The housing market lost half of its value and local stock markets collapsed. Much of the undeveloped regional land enthusiastically traded up to 1890 was now virtually worthless and remained untouched for a generation. During the relatively prosperous Roaring Twenties, many families inherited or cheaply bought blocks of land left over from the land speculation booms of the previous century and started building holiday homes on them.
The fascination with acreage resumed once again, with the most sought after blocks located just beyond the city fringes, in beautiful coastal and mountain locations. Mostly however, the Roaring Twenties were a phenomenon that largely by-passed the Australian housing market.
The children of the soldiers of World War I grew up in a time of struggle, reaching adulthood just as the Great Depression stalled economic growth in 1930, sent unemployment to record levels.
This has had a profound effect on their attitudes to housing from that time on and these forebears of ours were the parents of the Baby Boomers. During the Great Depression home ownership fell to its lowest levels in our history.
Many homeowners lost their homes because they couldn’t keep up the repayments as incomes fell and unemployment soared.
Even if new households could meet the required repayments there was no finance available for the purchase or building of dwellings because the banks had no money to lend for housing finance. But although the construction of new homes fell to all-time lows during the Great Depression, the country’s population continued to rise, although slowly. As the 1930s rolled on, the demand for rental accommodation soared, consuming up to 50% of household income.
This state of affairs only ended with the onset of the Second World War in 1939 as husbands and fathers went off to serve their country and population growth rates. In fact the Great Depression only really ended when the Second World War started, as economies switched to wartime production, but while the war dragged on couples kept delaying having babies until it was over.
Australia often demonstrates its capacity to change suddenly and dramatically. The prolonged years of drought that affected all but the northern parts of the continent for so many years have been followed by record rainfalls, accompanied by inundations of large parts of Queensland and Victoria.
So it was with Australia’s population growth rate, which only a few years after reaching its lowest growth rate ever, soared to its highest growth ever experienced, which was over 2.6% in the early fifties.
The causes of this unprecedented baby boom were new families starting up as the soldiers returned home and an influx of hundreds of thousands of refugees and immigrants from war ravaged Europe. They all sought the same things, which were to find political and economic security, a chance to build or buy their own homes and to start families.
Because most of these new families settled in the major cities where work could be found, new suburbs sprang up everywhere. Many of the old holiday homes were swallowed up by the suburban sprawl. They were cheap purchase options for post-war families and often subdivided into smaller suburban lots.
Huge areas of rural land on the outskirts of cities could easily be rezoned as residential and developed as long as the purchasers were prepared to put with the total absence of many basic services. The new owners were only to keen to buy or build cheap fibro and weatherboard houses and wait for the services to be laid on when they could.
These new estates were the preserve of children – two, three, four or more in each house as the fifties rolled on. In fact, the population growth rate did not really return to “normal” levels until the end of the sixties. T
he effect on house prices in city areas was staggering, as the rise in families requiring houses caused more than a doubling of establishing prices in just a few years from 1946 to 1951.
This was one of the most immediate effects of the baby boom, but there were many more. The rapid expansion of cities led to the need for major infrastructure development such as schools, health services, drainage, town water, energy, transport and communication services.
Even though the high population growth rate continued into the sixties, the price of housing stabilised after the initial price booms, because children were now mainly being born into existing homes, where they caused an increase in household size rather than an increase in demand for new housing.
There are around two million Australians who grew up during the Second World War and the ensuing Cold War. Their childhoods were spent in an atmosphere of fear and concern about the future, and they generally formed one income families in the fifties and sixties while land was plentiful and houses were moderately affordable, even on single incomes.
Largely because of their painful growing up experiences, they wanted to escape the trouble of city life on retirement – and their family home provided the means.
When they retired, many sold up and moved to northern NSW and coastal towns in Queensland such as Byron Bay, the Gold Coast and Hervey Bay to recapture the dreams of peace and plenty that had largely eluded them in their youth. Property price growth in these resort towns stopped several years ago and they have been falling in value ever since.
Not only has the flow of retirees north almost stopped, but the retirees who moved to locations such as Hervey Bay, Cooktown.
Airlie Beach, Yeppoon, Noosa and the Gold Coast five or 10 years ago are now relocating again to hospices and retirement homes, creating a surplus of properties on the market, many being sold by their children as inherited properties in which they have no interest other than the sale.
It is likely to be several years before buyer demand in these areas recovers to the point where price growth will return, although it surely will in time.
We see how each generation has played a major part in regional house price growth or decline in the 200 years of Australia’s history.
There are four million Baby Boomers in Australia and they are all about to retire in the next few years. They have played a large part in housing prices whenever they have been actively involved in the housing market in some way at the same time.
Like previous generations they will probably sell their family homes, which are becoming too large and probably located in areas that are no longer convenient to their changed needs. Unlike their parents, they will not move into retirement homes near their former homes, and unlike their older siblings they have no wish to seek an escape to glitzy retirement locations in the tropical north.
This is because they have less in common with older retirees than they do with their own children and grandchildren. In fact, they will avoid buying in such areas. With their lifestyle aspirations and financial capacity Baby Boomers and their children, Generation X are the drivers of the next acreage boom.
John Lindeman, director of innovative research firm Property Power Partners, is widely respected as one of Australia's leading property market analysts. For more information, visit www.understandproperty.com.au.
