Baby Boomers ‘Refusing to Downsize’ to Blame for Higher House Prices

Once the kids moved out, parents will sell the spacious family home with backyard and move into a smaller 2-bedroom apartment.

Or so we thought.

A recent article published by The Sydney Morning Herald reveals that doesn’t happen as often. Instead of downsizing, older couples and even singles choose to stay put in big homes. Market watchers reckon this scenario creates economic challenges.

With retirees choosing not to sell, fewer homes are available for younger families with children. This situation limits the supply of available houses and therefore increasing the housing rates in Sydney. Consequently, prime-age workers and their children are forced to find homes far from the business district.

This scenario affects the availability of the labour force in the CBDs as people prefer to settle at locations closer to their jobs.

[ RELATED POST: You Don’t Need to Sell Your Home to Finance Your Retirement ]

Why does Baby Boomers choose to stay?

The SMH article discussed the following reasons why Australian seniors refuse to downsize:

Wealth Preservation

Many baby boomers reckon it is better to park off their wealth in real estate than release home equity through a reverse mortgage.

Support Children

The price of real estate in Sydney has increased over the decades, and Baby boomers want to help their children.

Instead of paying rent, they encourage their kids to move in so they can save up fast to purchase their own home.

Grandparents also help in raising their grandchildren, which further saves up money for childcare.

Community Amenities

In the past, Australians would love to retire in a beach house or a new location with ‘greener grass and fresher air.

But baby boomers today prefer to retire in the comfort of their family and friends.

They choose to stay in the family home because they like the urban lifestyle instead of rural retirement.

Fear of Change

Some baby boomers are unsure about their future, so they choose to stay put instead of taking the risk.

Carer Continuity

With the rise of the knowledge economy, baby boomers are still in the workforce even if they are already retired.

Many of them are still hired as consultants or resource persons, so they need to stay put.

Health Services

The quality of health services in the CBDs is better than in rural areas, so baby boomers choose to stay.

Downsizing Options

Baby boomers who tried looking for a smaller space found themselves in tight competition with first home buyers.

Tax and Welfare Concerns

Primary homes are not included in the Age Pension means test. Thus, baby boomers may lose a portion or all of their entitlements if they downsize.

Another issue is the stamp duty on buying a smaller home.

[ RELATED POST: How does a Reverse Mortgage affect your Age pension?

Is It Right to Blame the Baby Boomers?

True, the low supply of empty nests affects the housing market and the workforce in Australian cities.

But is it right to blame pensioners for choosing to hold onto their family home that they have acquired through hard work?

We love to hear your comments about this issue.

 

6 Comments

  1. C James-Reply
    July 14, 2021 at 12:56 pm

    The very idea that Boomers should be pushed out of their life’s home so strangers can have the larger home is gross….Its like saying younger people should have to give up their nice car because so many of them are buying cars it pushes the price of cars up for older people!

    Baby Boomers have every right to stay in their own homes. Just as anybody else has. These older folks usually spent decades working hard to provide the best home they could for their family – and, one day, will, no doubt, leave this home for their children to enjoy (or, benefit from its value).

    The Boomers had to compete for their home when they were younger, and they had to work hard to keep & maintain it. So, too, should today’s younger people. No free rides. It was ever thus….

    • Mia Cusack-Reply
      July 19, 2021 at 2:02 pm

      Hi C James,

      Thank you so much for your comment! It is great to get your perspective & view and we appreciate you taking the time to do so.

      Kind Regards,
      Seniors First

  2. Maureen Stepanoff-Reply
    July 14, 2021 at 8:42 pm

    My home is my home, why should I feel altruistic for unknown others but to my own serious detriment?
    And why should I go to all the trouble, stress, heavy labour, high costs and non-financial social and emotional losses of moving for those strangers?
    My home was chosen to suit me and I worked hard and saved for 6.5 decades to get here, am I supposed to throw away all that? I live in a semi-rural beautiful isolated serene acreage environment I adore which is close to all my needs including excellent hospital etc whereas downsizing would rip away all that peace and serenity and beauty and non-encroachment of the nearby presence and noise and lack of privacy that suburban living would enforce. I have ever intention of finishing my life here.
    Many younger people should really question their own expectations! Our generation started with less high demands and a far lower sense of entitlement. I came from a privileged background but (and without our expectation of financial involvement from our parents!) our first adult/married home was a semi-lined double garage, our first bought home was a cheapie 2X1 wood fixer-upper house, and we worked and saved to progress upwards from there. We also were initially content and in fact happy with little furniture and even that was 2nd-to-10th hand or makeshift e.g. sarong over a tea-chest for a bedside table. We also started with no car but a small motorbike, then one small very-used car, then progressed upwards. But the norm seems to have been created now that a young couple expects to start with a brand-new 4X2 double-brick home, filled instantly with brand new furniture and furnishings and every high-demand piece of electric equipment available, plus 2 newish cars in the garage. Again, why should I lose what I worked hard for and treasure so much, for them to be so privileged? Also incidentally, for these younger ones to not have the fun, sense of adventure and achievement and sharing entailed in that gradual progression? The values are very very skewed now!

    • Mia Cusack-Reply
      July 19, 2021 at 2:04 pm

      Hi Maureen,

      Thank you so much for your comment! We do really appreciate you taking the time to express your view.

      Kind Regards,
      Seniors First

  3. D KING-Reply
    July 15, 2021 at 9:05 am

    we were living on 5 acres for 30 years both working and constant mowing witha tractor plus ride on and it got harder , so yes down size was my object but doing the homework was what paid off . checked out a great suburb with all amentities hospital and still close 40 min to brisbane cbd the suburb is ipswich my area is a very old qld homes gracious tree lined streets bus if wanted train station and all cafes and shops 15 min to ipswich hospital all important the property backs onto a park no neighbours behind took a while to fit into 800 sq but now its great doing reno and daughter moved near as well keeping that big family home is no go when
    you cant do all thayt work any more and a family home always need big maintenance so try to downsize in a great locality its the best.

    • Mia Cusack-Reply
      July 19, 2021 at 2:06 pm

      Hi D King,

      Thank you so much for your comment! It is great to get your perspective & view and we appreciate you taking the time to do so.

      Kind Regards,
      Seniors First

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