The growing impact of Australia’s evolving ‘grandparent economy’
As baby boomers age, they’re being increasingly relied upon to assist younger generations financially — and it’s not about helping out with the babysitting
2 min
Baby boomers make up just 21 percent of the population but hold almost half of the nation’s private wealth, creating a ‘grandparent economy’. McCrindle Research said the trend indicated it would have a significant influence in today’s society and directly contribute to the financial wellbeing of younger generations.
The impact of baby boomer wealth is routinely seen in the property market, with boomers often observed at auctions standing side-by-side with their younger relatives as they bid for a potential new home. The Bank of Mum and Dad is likely a significant contributor to above-average first-homebuyer activity in a market with rising values and interest rates at their highest point in 13 years.
CoreLogic recently cited figures from the Australian Bureau of Statistics showing first home buyers comprise 28.7 percent of new owner-occupier finance, well above the decade average of 24.6 percent. One might assume that over the year to May 31, when the median national home value rose 8.3 percent and the official interest rate went another 0.5 percent higher, first home buyers’ budgets and borrowing capacity may have been squeezed. Instead, the value of their loans rose by 10.1 percent.
McCrindle says: “Baby Boomers … are having significant impacts in the economic landscape, showcasing their pivotal role in wealth transfers as they actively contribute to and shape the financial dynamics over the years ahead. Over the next two decades, we anticipate that $6.2 trillion of wealth will be transferred to younger generations. As a result, the grandparent economy is rising, facilitating wealth and contributing to the financial wellbeing of younger generations.”
In a survey published last year, McCrindle found grandparents were acutely aware of their younger relatives’ financial challenges. When asked about their greatest concerns for them, 77 percent cited the rising cost of living and 72 percent nominated the rising cost of buying a home. These concerns are influencing baby boomers’ own financial decisions, with 32 percent intending to pass on more than 50 percent of their wealth directly to their grandchildren.
A recent report published by Colonial First State found three in four Australians plan to set aside a portion of their superannuation to pass on as an inheritance. Another survey by financial advisory company Findex found providing for relatives was a key motivator for 29 percent of investors.
McCrindle says: “As the current generation of grandparents continue to live longer and remain active well into their later years, their investments in properties and superannuation funds become pivotal components of the broader economic landscape. This trend signifies a notable shift in the traditional roles of grandparents, who are now not just recipients of support but active participants and contributors to the evolving economic dynamics, embodying the essence of the new investor in the financial landscape in the years to come.”
McCrindle Research shows two in five young Australians have received assistance from their grandparents. Most of that help is financial, including inheritances, living with them rent free, or paying cheap board, and getting help with everyday bills.
Australian shares fell on Thursday as Wall Street weakness, rising oil and persistent rate concerns weighed on most of the market. The S&P/ASX 200 declined 0.72 per cent to 8,702. The All Ordinaries lost 0.66 per cent to finish at 8,897. Mining stocks were hit particularly hard, while real estate also dragged on the index. …
Continue reading “ASX falls 0.7 per cent as miners and property stocks retreat”
Borrowers cannot control the Reserve Bank, but they can control how exposed their household budget is to its next decision. The RBA meets on 29 September with inflation concerns still elevated and major-bank economists increasingly bringing forward their rate-rise calls. Fixed mortgage rates have also been moving, reducing the value of waiting for perfect certainty. …
Continue reading “What mortgage holders should do before the next RBA decision”
A five-bedroom Palo Alto home designed by Steven Ehrlich is listed for $44 million, making it the city’s most expensive listing. Built around a dramatic concrete spine, the home features four courtyards and a pool.
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For years, tech entrepreneur Asher Waldfogel and his wife, Helyn MacLean, dreamed of building a modern house in Palo Alto, Calif.
The couple, however, worried about clashing with the Mediterranean-style architecture typically associated with their neighborhood of Old Palo Alto.
So they tapped architect Steven Ehrlich to create a design that paid homage to its surroundings with stucco, mahogany and titanium zinc cladding. They spent $20 million over several years building the house, completed in 2005.
Now looking to be closer to their adult daughter on the East Coast, they are putting the five-bedroom home on the market for $44 million—the most expensive listing in Palo Alto.
Waldfogel is an angel investor who co-founded Redback Networks, a telecommunications-equipment company. MacLean previously had a career in fundraising.
The couple purchased the roughly 0.4-acre site for $7.1 million in 2000 and demolished a circa-1930s Spanish Colonial home. The house they built pinwheels around a central staircase. It has 7,900 square feet of livable space, with four distinct courtyards and a pool.
A key feature of the home is a cast-in-place concrete wall, or spine, that is two stories high and about 80 feet long. “There’s a little bit of controlled chaos in what comes out of the form,” unlike a perfectly uniform surface, Waldfogel said. “If you want that, you do it in plastic.”
Waldfogel said he and his wife are thinking about the next phase of life now that their daughter is grown, although they have not decided where they will move. They also have a home in Sun Valley, Idaho.
“Right now we’re just trying to emotionally let go and decide what to do next,” he said.
Palo Alto, an epicenter of venture capital and tech startups in Silicon Valley, is home to some of the country’s biggest tech titans. Sales volume and prices are rising, with a median sale price of $3.5 million for the three months ending in August, up 5.8% year-over-year, according to real-estate brokerage Redfin.
Arthur Sharif of Sotheby’s International Realty—San Francisco Brokerage has the listing.
The megamansion was built for Tony Pritzker, heir to the Hyatt Hotel fortune and brother of Illinois Gov. JB Pritzker.
High-end homeowners are choosing to upgrade rather than relocate, investing in bespoke design, premium finishes and long-term lifestyle value.
