Here is an interesting article from the Herald Website:
Baby boomers are returning to the housing market in droves – but younger first home buyers are still doing it tough.
Mortgage applications last month were up 38 per cent compared to the same month last year, and were the highest monthly total since November 2007.
The information was supplied by credit information firm Veda Advantage.
Baby boomers (44-62 years old) in particular appear to be showing a disproportionate interest in the housing market, with a 45 per cent increase in mortgage applications on March 2008.
Generation X (28-43 years old) experienced a 34 per cent increase, while Generation Y (less than 28 years old) had the smallest growth with a 16 per cent increase on March last year.
“We are experiencing a level of activity in mortgage applications that we have not seen since house prices began falling in late 2007″, said Veda Advantage (NZ) chief John Roberts.
“This activity reflects the lower interest rates stimulating demand, and shows the market going to fixed terms to lock in these rates.”Roberts went on to say the much larger increase in the number of baby boomers applying for mortgages, compared to younger age groups, suggests that they are more cashed up and in a better position to snap up perceived bargains in the housing market. Generation Y have increased only marginally over March 2008
My take on this is people in general have been taking advantage of the lower interest rates avaliable at the moment. But the big point to consider is that now because of the lending criteria being so tough ie 20% it is hard for the younger people (gen y) to get the loan. Naturally the older generation of people have a bit of money behind them, possibly in equity and or savings. Leaving the younger generation with out of the equation.
Most of the older generations of people (generation X and the Baby Boomers) will probably have their own properties already and could be buying an investment property to fill up their nest egg for retirement.
My question to you is… Due to the current trend we are seeing here are we going to see a huge influx of rental properties come up for rent soon and in 10 to 15 years time when these older generations come to retirement and cash in their nest eggs, are we going to see this influx of rental properties come to the market again?? Makes you think doesnt it.
April 07 2009 | Buyers and The Market | No Comments »
You have no doubt heard of the “Baby Boomers”, those individuals born between 1943 and 1963. I have written about them and also about their offspring, generation X and the ones after that named generation Y.
This is a topic that interests me with a great deal of enthusiasm. The baby boomers are coming to the age of retirement. I am starting to see in my business many older people move into retirement villages. These seem to be great ideas and serve a fantastic purpose for what they provide. I am constantly reading and today Icome across an article that I want to share parts what it was saying.
Following World War II, Australia’s population grew at record levels. Australia was not alone in this phenomenon. The United States, New Zealand and Canada all experienced Baby Booms at a similar time.
The Baby Boomers are an important phenomenon to understand. They have had dramatic effects on society and will substantially impact the way the stock market performs over the next 20 years. For this reason, it is important to understand some of the background on this interesting group of people.
As mentioned, the Baby Boom was experienced in various countries around the world. Part of the reason for the “Boom” was that these countries were immigrant receivers and immigrants tend to be in their 20’s, the prime childbearing years.
At its peak in 1957, the US boom hit 3.7 children per family. Canada hit its peak in 1959 with Canadian women averaging 4 offspring each; that was over 479,000 new births that year alone! Australia’s boom was not quite as big as the Canadian or US booms; however, we still have a disproportionate number of people who are today in their 40’s and 50’s. Following the Baby Boom, we had a Baby Bust. Far fewer children were born during the late sixties, leaving Australia with an asymmetrical population graph.
The Baby Bust group, born between 1964 and 1976 are a much smaller group than their predecessors and are commonly referred to as Generation X.
Baby Boomers are a very significant and important group. It is not that, individually, they aren’t any different than any other group who preceded them; it’s just that there are so many of them. Due to their large numbers, Baby Boomers have had a significant impact on our society, making substantial changes as they grew. They have changed the economy, driven housing and other markets and transformed social attitudes and lifestyles.
In Australia and North America today, the fastest growing industries, apart from technology, are financial management, leisure activities and health care. It is very easy to see why. Boomers have been working all their adult lives, usually for someone else. They have raised their children and are now focusing on their retirement. They have had a magnificent time. They have not endured wars, or a depression like their parents and grandparents. They have enjoyed fantastic luxuries such as cars, world holidays and computers. They have been at the forefront of the age of discovery.
Unfortunately, the majority have not prepared themselves financially for their retirements, believing instead that like their parents, they would enjoy a comfortable pension from their employers and/or government.
The stark realities are now coming to light. Everybody, especially the Boomers, must take responsibility for their financial futures. Our government will simply not be in a position to provide adequate pension incomes for a growing number of retirees. Today, for every person who is retired, there are four people working, providing income to the government. By 2025, there will be only 2 people working for every retiree. What’s more, the Boomers, as they start to retire, will live longer than any group before them, well into their 70’s and 80’s on average. As a result, it is up to each of us as individuals to take responsibility of our own personal financial planning.
Read more about this by the original ideas at this website
The Australian government has made substantial improvements and preparations for the growing populations. They have introduced a compulsory superannuation scheme that all employers and employees must participate in and which is gradually rising in required contributions, but it will be too little, too late. The key to investment growth is time, a luxury many Boomers no longer possess.
Consider this fact, that at a return of 8% per annum, net of tax, an investment of $30,000 would require over 15 years to triple in value, not even considering the effects of inflation. Most investment strategies commonly promoted to the public boast returns of 4% to 10% per annum. We often see managed funds, superannuation schemes, bank term deposits and property investments offering such results. Many people consider these returns appropriate and even good! Unfortunately, many members of the public require a much greater return on their investments to adequately improve their financial positions before they retire (if they can ever afford to!).
There are going to be so many opportunities open up in the next few years in the void of this huge population group. Its an exciting time for a Gen Yer and a Gen Xer coming up.
November 05 2008 | Buyers and Sellers and The Market | 8 Comments »
New Zealand has got an aging population. Why? Well because of the Baby Boomers.
Baby Boomers are of people born in the ages of 1946 (just after WW2) to 1964. Over one million babies were born at a rate of about one hundred thousand per year, when New Zealand’s population was just 2.5 million. This boom has moved through society and has had a very significant impact at every stage. Today the ‘boomers generation makes up one quarter of New Zealand’s population and the bulge has not levelled out.
Today baby boomers having completed their own family cycle with the expensive years of bringing up children behind them, are mostly at the peak of their earning years often with both partners still working. But unlike their own parents, this group has lashed out lavishly on personal consumption. Not for them the discipline of saving and going without as a run up to their own retirement. These people have done the exact opposite to their parents and have built huge new homes for themselves, have purchased other holiday property, lifestyle blocks or apartments and have filled their garages with all sorts of toys like 4×4 trucks, boats, Harley Davidson’s and classic cars to name just a few.
Predictably, as the ‘boomers built or bought their dream homes, these properties skyrocketed in value. With a million ‘boomers all buying property at roughly the same time, it was no wonder that prices escalated.
Here are some facts about baby boomers and their real estate trends as we know it today.
Ninety-six percent of all boomers believe that owning a home is a very smart financial investment, and nearly 4 out of 5 now own homes, while 1 in 4 boomers owns other forms of real estate besides a primary home. These include one or more vacation or seasonal retreats, acreage or income-earning property.
Home equity plays a huge role in boomers’ financial planning and well-being.
Home equity represents a significant percentage of total household net worth for most boomers. Thirty-six percent of 50-year-old to 60-year old homeowners report that the equity in their primary residences is 51 percent to 100 percent of their household net worth. Thirty-eight percent of boomers between 42 and 49 report the same.
In terms of today and looking toward the future the trouble is there are very few ‘families’ coming along behind them. As most of the baby boomers were born in the 1950’s, during that time everyone who could have children had children. This meant that in the 1960’s there was a 10 year gap in babies been born, during this time very few new babies were born. This gap is still there today. For real estate does this mean the demand for houses that the baby boomers don’t need any longer is going to drop off dramatically.
So as the baby boomers start to retire from their big family homes, farms and lifestyle blocks there possibly will naturally be a large decline in this market, but where do they go from there? Maybe this is the foresight to the next real estate market niche to boom.
The next generation (Gen-X born 1964 – 1980, essentially the children of the baby Boomers) and their much smaller families are not only significantly smaller in number but they have a completely different criteria for their housing needs. Another interesting fact I read was that only 18% of New Zealand’s population now live in a ‘nuclear family unit’ with Mum & Dad and their children living under the same roof. Society has changed dramatically. But I will Talk about Generation X my next post on the generations. So keep watching.
Deon Swiggs
Property Profits
July 31 2008 | The Market and Uncategorized | 7 Comments »
Well I have recovered from my fall. All and well again and have so much to talk about. But right this minute I was just reading something on Baby Boomers from one mans opinion and it has really got me thinking and I imagine it will get you thinking as well. My thoughts on this are somewhat sceptical on what he says but it does bring you to wonder what will happen when the Baby Boomers do go into the retirement years and what effect his will have on both our economy, employment levels and the housing market.
Give me you your thoughts on this article. Would be very interesting to see how people of different generations view this, from the Baby Boomers themselves, The Gen-X generation and even from people of my generation the Gen-Y’s. Follow the link here…. Baby Boomers….. to read and let us all know what you think.
Regards
Deon.
June 06 2008 | Uncategorized | No Comments »
