Financially, the Covid-19 pandemic was a boon for Australia’s baby boomer generation, who amassed a giant war chest of savings.
As shown in the chart below, Australians over the age of 65 accumulated an incredible $160 billion in savings over the pandemic:
By contrast, younger Australians under the age of 45 have seen their savings decline, with those households in the key home buying and child raising cohort of 35 to 44 most negatively impacted.
Moreover, because Baby Boomers have the highest rate of home ownership in the nation (most without a mortgage), they have also enjoyed the largest increase in wealth since the start of the pandemic.
Roy Morgan’s Wealth Report 2023, released this month, showed that Australia’s wealth increased by 7.0% between March 2020 (pre-COVID) and March 2023.
This growth in wealth increase was driven mostly by the rising value of owner-occupied homes, which surged in value by 43.2% over the pandemic, from $4.16 trillion to $5.95 trillion.
Half of the population – primarily homeowners – currently account for 95.4% of Australia’s net wealth, according to Roy Morgan.
By contrast, the lowest half of the population – primarily renters – only account for 4.6% of the nation’s wealth.
Data from PEXA also shows that an increasing number of homes sales across Australia’s three largest states are cash purchases, primarily by older Australians:
In 2022, the total value of residential sale settlements in the eastern states was $478.6 billion, with $122.5 billion of these being cash funding.
PEXA’s chief economist, Julie Toth, told The ABC that rising interest rates have not deterred older Australians from purchasing property.
“When those people move home, when they trade up or down, they typically don’t need a mortgage”, she said.
“And this speaks to the distribution effects of the interest rate changes that we’ve seen, because this group is largely unaffected by interest rates when they’re making those decisions to move”.
Baby boomers already dominated home ownership in Australia. And it appears they have tightened their grip on the nation’s homes, as well as wealth.
