Hi all,
We’ve all read and heard about what the baby boomers will do in their retirement, ie sell up their place in the city, move to the coast etc.
While this might be true to a degree, does anyone actually know of people who are doing this or have done it? Theories are fine, but real-life examples are better I reckon.
I did a straw poll of the 3 guys I work with who are 55+ (I’m 30), they reckon they and the vast majority of their friends, who are very well off, have no intention to do the “sea change” thing… some have holiday houses down the coast within an hour or so of home base, but they’re not going to live there full time, because they’ll be too far from kids/grandkids/city entertainment etc.
I also spoke to my mum and step-dad to gauge what their friends are doing, and their stories were similar.
Also, there’s always stories about how Australians are terrible savers, so how do the theories about an apartment or something in the city with a house down the coast stack up? Not everyone has a 500 or 600k house to sell, and super will only go so far.
I only put a certain amount of faith in the written word/theories etc… I’d love to hear what other oldies are planning for their golden years, because some property investors are saying “chase the boomers”, and while that might be true to a point, I wouldn’t bet the house on it.
I’ve read somewhere that younger people are the ones leading the lifestyle change… and it’s a change my wife and I made ourselves, move to the country, work in the city, and it’s a great way of life…
cheers
rI would also be subscribing to the whole babyboomer thing if it wasn’t for the fact that all of the over 50’s in my family have sold up and either moved in land for more affordable housing or in one case moved to the country so that they could cash up and pay for their house outright.
I myself (am not ashamed to say it) live in a very nice coastal suburb where many of my neighbors are in their 50’s and older and I have noticed 2 things about them.
1) They either bought their house back when the suburb started and have no more to owe and can get by on a pension (usually the smaller older style homes that are slowly getting knocked down now) or they are
2) The older people who drive a Mercedes and can afford to live here because they basically sleep on a pile of cash, stocks, bonds and not forgetting real estate deeds.Just how it’s happening around me – could be different on your side of the island!
P
i wouldnt bet the house on it either. but its worth considering as a major influence in your overall portfolio…
the trend is your friend…
Agreed,
I asked my parents (60-ish and well off) whether they were going to do the sea change and they both voted a strong NO. Them and all their friends in the same boat. They want to stay close to family in the Hills District.
My wife and I though, bought our first home at Narrabeen. We’ve always loved the beach and our primary criteria for the new place was walking distance to the beach.
There will always be demand for coastal property but it may not be the baby boomers.
Cheers,
Michael.hence my affinity for coastal Queensland rogue, particularly the areas with strong industry and employment base and major population centres to go hand in hand with the lovely surrounds.
cheers
rrichmond queensland coastal property is good – no argument here! although you gotta watch global warming – could get too hot!!!
any aircon buisnesses for sale up there – good time to get in
hehe (tounge firmly in cheak)
Originally posted by richmond:We’ve all read and heard about what the baby boomers will do in their retirement, ie sell up their place in the city, move to the coast etc.
I only put a certain amount of faith in the written word/theories etc… I’d love to hear what other oldies are planning for their golden years, because some property investors are saying “chase the boomers”, and while that might be true to a point, I wouldn’t bet the house on it.
Keep in mind, something doesn’t have to actually HAPPEN in order for it to have the same effect as if it actually DID happen.
For instance:
John Howard said interest rates would go up under Labor, even though he himself said a few months earlier (when interest rates kept increasing every couple of months), that a government cannot influence interest rates. Even so most of the goobers I’ve met who voted for him say their reason was exactly that – they were worried interest rates would rise under Labor. BAAAAA!!! Sorry – I can’t type a sheep bleat very well. (Sheep follow the one in front, even if they have no idea why the previous one just jumped.)
Another example is, over the last few years the experts said constantly we were in a bubble that would soon burst (and those comments started six months into the boom). Three years later, after the constant barrage of hearing this, people began to drop out of the market – mostly BEFORE prices began to deflate (and they never did “burst”).
Allan.
Originally posted by richmond:
[br they’ll be too far from kids/grandkids/city entertainment etc.HEALTH, most ppl over 60 don’t want to be too far from their specialists, after all, the health of a lot of boomers is pretty poor, once you take their meds away.
anyway Good post,
I don’t know that there are many baby boomers doing the sea change thing in WA. There is a certain number of them, but I think there is a big shift in the young population as they go and search for the by-the-sea life.
Hubby and I did it as we couldn’t see that buying a house in PErth by the ocean was anywhere near affordabale or in a suburb we liked, so the next best thing was to move town. We settled in Geraldton and are absolutely loving it! Not just us, but I know of several young couples who have recently moved here for same reason. Affordable real estate by the beach.
From what I can gather from my folks (62 and 52yrs old), they and their friends have no intentions to move or if they do, they all want to stay in the same area but just get a smaller place. They all seem to like the fact they are close to the city and all amenities.
So I am not sure that the whole sea change idea for baby boomers is true. Certainly for a few of them, but from what I can see, they seem happy where they are or they stay in the same area, but down size.
Steph.
Success is 1% inspiration and 99% perspiration.
Whilst your anecdotal stuff is relevant, you might not need a high proportion to make the “sea-change” “tree-hugging” demography work. Eg if 1 in 100 retired to the “coast” 20 years ago and 2 in 100 retire to the coast in 10 years, there is still going to be solid demand for city dwellings, but there might also be a substantially increased demand in some rural/regional areas. Bear in mind average life expectancy in Australia has increased substantially in the last 20 years and people are still physically and mentally active well into their retirement.
Also, bear in mind technology means people are not as bound to their workplace as they once were. Eg someone could have a weekender a couple of hrs from their work, work there a couple of days a week and go back to the city say 2-3 days a week. When/if this occurs people will build up friendships and community and may change locations for retirement particularly if there is good infrastructure available
There is a lot of evidence to suggest that property prices have dropped or at least ‘reached a plateau’. Activety in real estate appears to be low. Combine these things with the Baby Boomer event we will soon experience and I feel we have to consider real estate to be, at the very least, an investment for the long term. Rentals are down, yield is low and basically people are still looking for ‘boom’ prices on their properties.
Every investor has to do their own research and make their own decisions. My conclusion is that the retirement of the BBs is going to seriously discourage an increase in the value of urban property in favour of life style property. An oversupply of urban property will keep yield on urban property low because of low demand.
There is a positive here, you just have to be nimble enough to make the right choice. At the moment a bank’s 5-6% term deposit looks very appealing.
Okay so we know that some babyboomers will be looking for lifestyle and some investors believe that they’ll be able to cash in on that. But how do all of the retirement villages that have been popping up up and down the coast here in WA fit into this.
In my neighborhood you can’t buy a decent house for under $600K but just around the corner a retiree can buy a villa in a retirement complex for under $200k some of them have views.
And last time I checked none of these places were available to people under 55’s or non-retirees to buy. What if more of these places spring up?P
Dear ‘princess
I guess I don’t understand the point you are trying to make. These retirement villages are surely trying to take advantage of the people about to retire and want to enjoy the comfort of this sort of living. My guess is they may sell their family home now that the family have moved out and retire to a retirement village or some other accomodation. Some will find these villas attractive others will have teir own ideas.The presence of these retirement villages indicates that sombody has researched the matter and has concluded that soon many people will retire and will want to buy places such as this. I guess this confirms the predicted surge of people retiring and attempting to unload their assets.
Originally posted by waprincess:Okay so we know that some baby boomers will be looking for lifestyle and some investors believe that they’ll be able to cash in on that. But how do all of the retirement villages that have been popping up up and down the coast here in WA fit into this.
In my neighbourhood you can’t buy a decent house for under $600K but just around the corner a retiree can buy a villa in a retirement complex for under $200k some of them have views.
And last time I checked none of these places were available to people under 55’s or non-retirees to buy. What if more of these places spring up?P
I don’t know if you are aware that such places in retirement villages don’t sell for $200k they require a bond of $200 to allow one to move in, and the owners will deduct from such bond ridiculously high costs, in the order of 20 or 30k, for each year one is able to give death a miss, until one goes and the property is vacant and someone else drops another $200k. You can hardly compare a Torrens title with such elaborate method of pulling the rug under the elderly and depriving them from their family home.
I looked into building retirement villages but found the industry so repugnant that I decided to develop an invention in stead. More satisfaction and no guilt.
May God prosper you always.[biggrin]
Marccrj – spot on. you only need a very small percentage of baby boomers to make joint type decision and it will create a market. im not sure the exact figures but the baby boomer thing has only just begun. and will be in full swing by 2015.
as one market scribe suggested – ‘they are an irresistable force’.
marsden you make some good points. you articulated what i think i was thinking as far as trends go.
cheers
Originally posted by marsden:Every investor has to do their own research and make their own decisions. My conclusion is that the retirement of the BBs is going to seriously discourage an increase in the value of urban property in favour of life style property. An oversupply of urban property will keep yield on urban property low because of low demand.
Marsden,
Not a bad theory, but my personal conclusions are different. I tend to think that the Baby Boomer effect will not result in diminished demand for urban property. I agree that lifestyle property demand might increase, but this is probably for a small percentage of the Baby Boomers (BBs). I also think that population growth is an absolute requirement to fund the BB phenomenon.
As such, the government is already advocating the GenXs “breed” us out of this problem. If this doesn’t work then they’ll be looking off shore to find skilled imigrants to fill the gap. The government can’t afford to pay the BB bills so need the PAYG tax from the workforce to do so.
My conclusion is then, that population rates in Australia can only go up and are likely to grow steeply. This will only increase demand for property in the key city markets where new imigrants normally look. Most imigrants settle in Sydney, despite government attempts to disuade this.
I feel IMHO that any residential urban properties that adhere to the fundamental rules of “quality” property as defined by Spann and others, will definately remain a solid investment. I’m not going to try and place any bets on the lifestyle change of the BBs. I’m more interested in the population growth that their retirement will demand.
Everybody needs somewhere to sleep at night, and a lot more tax payers means a lot more residences required to house them.
Of course, this is just my humble crystal ball projecttions on the situation. Everyone has their own take on where we’re headed for now…
Cheers,
Michael.I totally agree that retirement complexes are nothing short of scurrelous but that doesn’t change the fact that they’re springing up all over and that regardless of any strata or limited type of agreement – a good percentage of people are going to choose that kind of life.
And rather than “not understanding” how this gig works – I’ve toured several of these “lifestyle” complexes in the last year as a relative in retirement is considering this option.
This option came up for two reasons (neither to do with dwindling cash reserves)
1) Resort lifestyle
2) Secured up the wazoo – patrols, buzz buttons and whatever else these big conglomerates want to throw in.
That these conglomerates can afford beach side real estate in exclusive/quiet neighbourhoods also adds to their appeal.Waste her money on strata? I wouldn’t have her do it but save her money for her kids after death and live a life on a property too big with too much maintainence and no lifestyle…
You really can see why some elderly people do it.P
P.S I have another theory how Australia might cure it’s lack of future work force…
Communism can’t last forever and we have a very large population looking for a home in the sun just like the rest of us and just over the equator:)Thanks Michael, I would like to think that you are right. We have to factor in the concept that BBs are a global phenomenon and that there will considerable competition for migrants by other countries. I do not suggest that our cities will become ghost towns, rather my thinking is that property prices will, at least, be affected for the next 10 to 15 years.
On another point, there must be different retirement villages on the market. I have recently looked at a 600k house within a ‘security complex’. It is strata title and all property services are provided. You manage your own affairs and are therefore free to travel,golf and live a contented retirement. These homes were being snapped up by lawyers and accountants so I doubt that anyone was being taken advantage of. You can, of course, buy and sell as you please within the title limitations.
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