Family homes a bad investment? (PPOR)

depends on your budget. I think if you can buy as close to public transport and other key infrastructure, beach etc, the land your big PPOR will still go up and as we all know...generally, land goes up buildings go down.
So buy away, Ive pumped lots of coin into my house and it doesnt matter so much if it doesnt get 10%PA, as it can improve your family life
 
Not all boomers are looking to sell. My dad, for example, has said they'll have to carry him bodily from the house, even though it's just two of them living there.

The key is that boomers aren't desperate sellers. Why would they deliberately sell en masse into a falling market? Some will sell anyway. Most, I suspect, will sell if they can get a good price. If they can't because there aren't enough younger trader-uppers to buy, they'll just sit back and wait.

Those whose kids are still at home can't sell. I think many boomers are secretly happy that their kids still 'need' them.

Many will want to live in the same area, and will realise a new unit isn't much cheaper than the old house, so why give up all the space?

OOs only sell into a falling market if they're desperate. And boomers with paid off homes generally aren't.
Alex
 
John - i think that report is a little - uh, sensationalist.

1) just because someone is retiring from their 40+ year job, doesn't mean they want to live in a makeshift coffin until they die. Not all BBs want to downsize to a 2x2 - in fact, the research just completed for the 80+ over55's development i'm involved with suggests that smaller plots of land andhouses inside large complexes are for those without friends looking to network (incl immigrants), those looking for a lock and leave setup for travel, those looking for communal facilities and the infirm.

2) i built one of two (currently) single stories this close to the beach. everything else around me is a 400sqm monster, mine is a humble (for this area) 250sqm single storey with a small yard and easy access to the beach, lever style door handles, stone benches, hobless showers, veggie patch, no steps, easy care front yard, brick and tile.....see where i'm headed? i'm going for the market appeal in 10 years' time.

3) invest where everyone else will want to live - i'd pick gooseberry hill as much as mosman park or burns beach - the value attributed to ocean views, inland views, river views and/or locations immediately around them will only increase in value as land releases like Banksia Grove are marketed more and more.

4) land - they aint making any more of it. if you want, try buying a Dx block with a well positioned front home and reno. Selling a Dx block to a half savvy retiree means cashback for them immediately. Or buy a Dx block and only build on one lot - leave the other as yard or tennis court.
 
It surely depends on what other vehicles the Boomers have used for their retirement.

A lot of Brits have the attitude that "my home is my pension", and plan on downsizing on retirement to free up equity. If that happens in Australia then there you'd see large numbers of family houses come up for sale over the next few years.

As to whether or not a family home is a bad investment, it depends on how long you stay there. If you're staying somewhere for the short term then it's cheaper to rent. (Yields are below interest costs at present.) But over the longer term (say 10 to 20 years) the balance shifts in favour of buying.
 
So here's the REAL picture from a real-life boomer approaching retirement.

Hubby and I are in a 4 bed 2 bath house and have no intention of downsizing. Well, if we had to we could make do with 3 bedrooms I guess. We need a computer/craft room (presently 2 rooms), and a spare room for when kids living interstate come to stay.

Most of our friends think the same, and the only ones who did move actually bought a bigger house. And kept the previous house where their son is living as it is CGT exempt.

Let's face it, even with today's smaller families, even families with one child will want a study, so you are still looking at 3 bedrooms minimum. Chuck in the need for a spare room for visiting rellies and we are back to the 4 bed house. Kids sharing a room is unheard of, so even small families want bigger houses.

We are staying here as long as possible, maybe looking to downsize in about 15-20 years when we can't totter from one end of the house to the other. To be brutally honest, we have been here for over 30 years so packing up would be a nightmare.

Unless... We do have an IP very close to the beach bought with retirement in mind (in case we want a seachange) which we may or may not move into at some stage, but it is nearly as big as our present home so could not really be called downsizing.

Another factor often overlooked is that most boomers' family homes were bought before CGT therefore are exempt from its provisions. We bought in the late 70s and have been advised to hang on to it as long as possible.

Everyone we know is entering retirement with independent means, I know of only person who thinks they MAY qualify for a bit of pension. Despite the headlines many boomers have adequate investments and substantial superannuation.
Marg
 
I think marg has a point, my parents only moved out of their massive house (8 kids) when Mum was late 70s and dad late 80s. My siblings ( who are all boomers over 55) have no intention of downsizing for ages as they want room for grandkids to come and stay, or friends etc. If I ever sold where I am now it would be for a much bigger house, so that I could throw house parties for friends to come and stay.
 
I doubt that there will be a rush of sellers in that market who haven't made other plans for their retirement. My parents do not want to move out of the inner eastern suburbs home that they have lived in for nearly 30 years. Most of their friends are still living in their 4-5 bedroom houses though the kids are long gone & have kids of their own. "Hitting 65" is a specious argument. It's more likely that as a demographic the boomers will sell sometime between 65 & 90 (when they can no longer negotiate the stairs & the kids force the issue!).
I'm pretty sure that population growth and demand for inner city properties will soak all of this up. There are cashed up buyers right now looking for family homes in the inner suburbs and they would LOVE these properties to all suddenly hit the market. I rarely make predictions without qualifiers (esp on SS) but this time I will: this scenario is not going to happen!
 
We're building a completely generic 4x2 right now and will be fishing for a bigger one after that. Our criteria for the next one is for an extremely long-term house, one we won't ever move from. Needs a studio, guest room for visitors, place for the kiddies now (visiting grandkids later), a nice dungeon, has to be energy efficient, and with a floor plan that can be broken up so the 'kids wing' can just be closed off when the offspring move out, leaving us with a self-sufficient smaller part of the house that takes up less heating/cooling etc but the rest can still be used for visitors in school holidays. I'll be well into my 50s before the youngest kiddie moves out anyway - the downside of breeding in your mid 30s.

My inlaws would disagree completely, as we intend to build the 'dream home' HERE, not in Adelaide. And apparently having your PPoR in the 'wrong' suburb is akin to not having one at all.
 
I second what alexlee said. My parents live in a big two-storey, triple garage home. That don't plan on moving as they love where they live and my dad collects cars in his garage. They also don't think it's worth the selling/buying costs to move to something smaller.
 
depends on your budget. I think if you can buy as close to public transport and other key infrastructure, beach etc, the land your big PPOR will still go up and as we all know...generally, land goes up buildings go down.
So buy away, Ive pumped lots of coin into my house and it doesnt matter so much if it doesnt get 10%PA, as it can improve your family life

Can't agree more, buy away.

We upgraded 2 years ago it has improved our lifestyle immensely.

Also, I can't see my daughter leaving home as she has seen how many struggle living away from home.

Besides the upside is you also get enjoy continued CG.

Cheers, MTR
 
My In-Laws live by themself (ie just the two of them together), and they just finished and moved in a house with approx 500sqm of living, on a 2500sqm block.

Why? Dunno...
 
My mother, who is too old to be a baby boomer so she might not count, recently moved from a two bedroom place to a three bedroom place.

Scott
 
My mother, who is too old to be a baby boomer so she might not count, recently moved from a two bedroom place to a three bedroom place.

Scott

My parents did the same at 65. Moved from a 3 bed, 1 bath, 1 living area, 1 garage, to a 4 bed, 2 bathroom, 2 living, 2 garage home they built for low maintenance in their retirement.

Actually all their friends (aged 70 to 85ish) are still in their 'bigger than they need' homes, even the ones that need maintenance and self care help.

It's easier to close off doors and not use parts of a house than sell up.
 
Top