BILLIONS of dollars worth of property – more money than ever before – is expected to change hands in the near future in inheritance payments from one generation to the next.
New South Wales is expected to lead the nation with $155 billion being left in wills by 2025. This is 38 per cent of the national figure of $400 billion.
The figures, contained in the latest Bankwest Financial Indicators Series report, represent an unprecedented change of wealth between generations.
The movement in the reservoir of wealth is the result of so-called ‘veterans’ (people aged 70 plus) dying and passing on a pool of property assets to their adult children.
This windfall is expected to expand as older Baby Boomers – a famously well-to-do age group – start to pass away, leaving behind billions of dollars worth of property.
Bankwest’s ‘Inherited Housing Report 2010’ reveals that a combination of rising property prices, an ageing population and high home ownership rates will combine to produce perfect conditions for the record intergenerational wealth transfer or inheritance.
Bankwest Retail CEO Vittoria Shortt said the report was based on ABS census data and showed that $407 billion worth of housing assets would be inherited by Australians over the next 15 years.
“One in 10 homes owned by households will potentially be given away by 2025, which represents an unprecedented baton change in intergeneration wealth, the likes of which we have never seen before, including a projected $155 billion changing hands in NSW,” Ms Shortt said.
“The veterans and Baby Boomers have ridden a rising tide of property prices over recent decades and are now sitting on housing assets worth $1.5-$2 trillion nationally.
“Crucially, our report projects that there will be an 88pc increase in the number of estates with housing assets in NSW by 2025.
“Annually housing inheritance in NSW is projected to rise from $6.3 billion in 2009 to $11.7 billion in 2025, an increase of 85pc.”
The projections are based on current property prices and do not model any future price increases.
Less certain, Ms Shortt said, was the impact this would have on the wider economy.
“It’s no secret that many Boomers are determined to cling to a lost youth,” she said.
“They might decide to sell their property and go out with a ‘bang’, rather than sit on a huge asset and pass it on to their adult children.”
Projected figure for:
• Sydney $113bn.
• Melbourne $86bn.
• Brisbane $33bn.
• Perth $33bn.
• Gold Coast $12bn.
• Hunter region $11bn.