'Give Baby Boomers a break - they're not to blame for Australia's housing crisis'

We're called the "Baby Boomers," but I'm starting to think a more appropriate name for our generation could be the “Scapegoats”. Not because our greying beards and balding heads mean we now resemble a barnyard creature, but because our lambs seem to think we’ve put them on the chopping block!

Not enough houses? Boomers are hoarding them.

Not enough home units? Boomers throw down cash before first-time buyers can say boo!

But most older Australians agree that the property market is broken.

It pains us to see our kids and grandchildren struggle, and those fortunate enough will do all in their power to help.

That’s why the Bank of Mum and Dad is now, in aggregate, the sixth biggest home lender in Australia and, according to Australian Housing Monitor research, helping 40 per cent of first-home buyers. That’s up from 15 per cent in the 1980s.

While some of our property decisions have had an impact, we do not deserve derision. Here's why.

Boomer housing monopoly

First, let's discuss the myth of the housing monopoly. It reflects a real estate market that has drastically shifted over the decades.

When we bought our homes, prices were more accessible, and while interest rates were sky-high, our wages were aligned with housing costs.

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Fast-forward to today, and you'll see an economic landscape that has changed dramatically.

According to Compare the Market research, the cost of buying a home in our capital cities is now 14 times our annual income, up from five times the annual income from 1990.

Housing markets have inflated, wages have stagnated, and opportunities for younger generations are considerably diminished.

This isn't about denying younger generations opportunities but about navigating a system that has long favoured real estate as a safe investment.

I don’t personally have an investment property, but I know that the people who do are usually just regular mums and dads trying to grow wealth to support their families.

We also should recognise that without investors, there would be nowhere to rent, and that’s not a good situation either.

Only a handful of Baby Boomers fit the wealthy, elite stereotype we often see in the news.

We are a diverse group with varying financial situations.

While some may be affluent, many are simply middle-class individuals who have worked hard to achieve their homeownership goals.

It's essential to recognise this diversity and avoid vilifying the entire generation.

According to the Australian Tax Office, there are just over two million property investors.

Of those, 71 per cent own just one property, while 0.19 per cent have more than four properties.

Damned if you don’t

We hear the call to sell our large homes and "free up" properties for younger buyers.

Moving to smaller, more accessible accommodation does seem like the obvious choice.

But as I’ve said in past, it’s not often an easy decision! Our homes are not just assets but repositories of lifelong memories.

Downsizing isn't merely a financial transaction; it involves significant emotional and lifestyle adjustments.

With the average retirement age now 64, many Boomers are still working, with active careers and responsibilities that necessitate living in larger spaces.

Plus 50 per cent of people retiring today have a mortgage on their property.

It's also worth noting that many older Australians hold onto their family homes because their adult children live there longer.

In 2021, more than half (51 per cent) of young men aged 20-24 lived at home with their parents, up from 46 per cent in 2006.

For many Aussie parents, it’s a great way to help the kids save for a home of their own.

They are able to put away a lot more money than they would otherwise be doing if they were renting.

So it’s wrong to say older Aussies are hogging space - it’s a lot more complex than that.

Mind you, I don’t think enough Boomers know about the Downsizing Incentive where over 55s can sell their family home and contribute $300,000 each from the profits into their superannuation as a lump sum.

It can be a great way to supercharge your super as you approach retirement.

Damned if you do

On the flip side, older Australians who do downsize are accused of outcompeting first-home buyers, who can only afford smaller units and houses.

This is because downsizers have had the benefit of time; they have built up equity over the years, meaning they’ve got more cash to splash.

And if a seller receives two offers, and one party does not require a finance clause, they’ll typically be the preferred buyer.

It is a big advantage, but the fact that a property appeals to more than just one buyer is hardly anyone's fault.

The problem is that there simply aren’t enough properties to go around. And it looks like the supply shortfall isn’t going to get better any time soon.

According to the State of the Housing System report, at the current rate, Australia will be about 40,000 units short of its new home construction target of 1.2 million by 2029. And building approvals are at 10-year lows so the pipeline of new properties being built in the future is just going to add to the current shortage.

Skills shortages, construction insolvencies, weak consumer confidence and cost inflation have all compounded the issue.

Old and young Australians alike should be ropable that past governments did not have the foresight to prevent this by shaking up development and zoning rules years ago.

Governments have simply not planned for either the generational housing change or the big increase in migration to ensure enough properties have been built to meet demand.

Let’s stop the blame game

Unfortunately, it is going to take years to make up for lost time and decades of poor planning.

So, rather than pointing fingers, let’s focus on how we can work together to make housing more affordable in Australia.

If you have a two-storey home, can you make use of some free space to accommodate renters?

If the kids are struggling to buy a property within their budget, can you look at a property with a granny flat or separate living space to help make the mortgage more affordable?

Make sure the Bank of Mum and Dad continues to be active.

Encourage, rather than pillory, investors to make more rental properties available and all of us point the finger of blame at all levels of Government who have let us down through poor planning.

A bit of compassion and creative thinking could go a long way. Otherwise, the scapegoats and sacrificial lambs of the world will continue their bleating.

David “Kochie” Koch is Economic Director at Compare the Market.