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The Forum > Article Comments > Busting the boomers > Comments

Busting the boomers : Comments

By Damian Jeffree, published 27/11/2006

Baby boomers may have to give up some of their ill-gotten gains to achieve a more equitable future.

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The baby boomers wealth will transfer to the younger generations probably starting around now and for the next 10-30 years. After all they can't take it with them - although they can take their knowledge if they don't pass it on.

As they draw down on their investments/houses/shares they will pull massive amounts of money out of the market causing the prices to drop. This will also be because younger people will not have as much equity and will not be able to (or unwilling to) go even further into debt than they already are.

I ask you the question what happens when the market has 106% mortgages - the market can ONLY go up with income growth and has a large downside risk.
Posted by geoff_, Tuesday, 28 November 2006 8:27:57 PM
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I agree it can be tough to Gen Xers to get a start in housing. But it's also a bit tough blaming the boomers. This boomer got started in the market by going without. Yeah, I know that sounds boring, but it's true - no lattes, no takeaways, no new technology, no holidays, no concerts, until we saved for the deposit on a low cost house way out in the non-blue ribbon 'burbs. Did the long commute into work in a clapped out Toyota Corona. Traded up houses through the years and finally paid off the mortgage. Can't speak for the rest of Australia, but in Brisbane you can still do the same today.
Posted by Suelyn, Monday, 4 December 2006 1:24:49 PM
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Tough? For a gen X to start in housing?

What on earth gave you that idea?

Yes! I know that, if they actually rent, then the inner suburbarn terraces that they occupy are worth over half a milion for a cheapie.

But lets get back to reality.

The gen X who has left school at 17 and done an apprenticeship. And is now 29 and stil living with mum and dad and paying minimal board.

Income at least, 70 grand. Cashed up Bogan!

Even after taxes, compulsoury super, and living expenses a savings rate of ten grand a year is easy and twenty a year quite possible.

Now forget the terrace. The smaller, non quarter acre house and land packages on the outskirts start at 200 grand. Ten years living at home and the gen X can pay CASH for a house. NO baby boomer even contemplated the idea for a first home.

With no interest the same gen x can keep saving to a second investment home by 40 and a third by 47, (income from the investment home) and so on to age 55. Thats first bite at the super. Five investment properties by that age is quite feasible.

Many of the baby boomers had no option but to leave home age 15 to find work. Rent till 25 and saved deposit and then pay mortgage till age 45. Only then think about ONE investment property.
Posted by sparticusss, Monday, 4 December 2006 4:06:40 PM
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An excellent article this is. This greed of buying up housing has done nothing but pit people against one another, forcing more and more people onto the streets so one group of people make a fistful of dollars.

Such is the curse of the Baby Boomer's who turn to dust whatever they touch. Destroying families, housing, freedoms, liberties, industry, the list goes on.

A cap must be placed on property investors so that they own no more than two houses/flats/units. It is all about being equitable and what is truly, the 'fair go'.
Posted by Spider, Tuesday, 5 December 2006 11:34:04 AM
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Wow Spider, grow up! Many of the baby boomers who have acquired a property portfolio have done so to provide a retirement income. There may be a few very wealthy people in there but the aussie battler is being hit with land tax, maintenance costs rates etc.

Sound a little vague, then lets use some real people.

Take Mr XXX, whose income in 1999, the last year he worked, was $35,000. He owned his home and 2 occupied rental properties. He was doing up a third house. He was self employed and had lost all his cash in the credit union and stock market collapse in 1990 so he had more faith in housing than shares.

Look at Mr XYZ who worked at sea all his life. He wasn't eligible for an Australian pension so he used his savings to buy 4 flats in Wollongong. He lives in one and rents 3 out. His land tax is $16,000 and his rental income is $36,000 - so he lives on about $14,000.

The baby boomer generation has been told that the old age pension will not exist and that they should provide for their own old age. The superannuation is like the wild wild west, full of sharks and regulated by incompetent gubment bureaucrats. [I am sounding like Col_Rouge - I think I know what his business is!] The consequence is that many people are ripped off by poor financial advice from so-called professional advisors at the end of their working lives, so many people prefer to DIY retirement income from property.

I know 40 year olds on combined incomes of $120,000 who claim they can't afford to buy a house. Many property owning baby boomers scrimped and saved to get their rental portfolio together.
Posted by billie, Tuesday, 5 December 2006 1:14:37 PM
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The damage done by Damian's narrow and one-sided account regarding equity holdings - which goes "Ooh look some people have more equity than others, who can we blame for this and how can we fix it? Oh I know, make them give it back." As if we were all a bunch of school kids in a playground. - is that it encourages just the sort of victimisation we have now received from Spider.

Damian and Spider and a few others who are seeking to "bust the boomers" need to put their heads up and take a look around at the wider issues. They need to ask what else has been going on in an economy supported by government policies that are doing little or nothing to mitigate rising housing costs.

I doubt that an investment banker trading in equity has any idea of what goes on in the world other than knowing where the equity sits. Damian your argument is just way too simplistic.

Regards, Wal
Posted by wallabystirfry, Wednesday, 6 December 2006 7:22:45 AM
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