A recent report from Bankwest called The Inherited Housing Report states that, “An unprecedented ‘baton change’ of wealth is expected over the next 15 years as the older generation hands over as much as $400 billion worth of property to their children”.

The report states that an ageing population and high home ownership rates will combine to produce a “perfect storm” of wealth transfer between generations.
Bankwest Retail chief executive Vittoria Shortt is quoted as saying that, “In 2009 there was an estimated $16 billion of housing inheritance and our report shows this could increase by 93 per cent to $31 billion a year by 2025”.

Ms Shortt added that veterans and baby boomers were now sitting on housing assets worth between $1.5 trillion and $2 trillion.

What does this mean for your family and for your children in particular? If you own your own home and have equity in it, it’s possible that your children could benefit from it.

However, if you are like the 94% of Australians who are seriously under-funded come retirement time, you could well find yourself in a position where you have to sell your home so that you have more income to live off.

This would be a sad and wasted outcome, where you liquidate your most valuable asset to live off the proceeds, thereby passing it out of your family. This would mean that your children would have no benefit from all the years of mortgage instalments and the growth in its value, and they would similarly have no leverage or leg up in their quest to buy a home of their own.

Many of our clients are doing things differently, and using the existing equity in their family homes to buy additional investment properties so that they have a portfolio of property assets when it’s time to stop work.

With property prices typically doubling every 8 to 10 years, the earlier the investments are made, the greater the asset values 15 years down the track.
The increases in rentals and property values caused by inflation, our surging population, and limited housing supply, lead to significant flexibility and options when it comes time to retire.

A common approach is to have a goal of buying as many investment properties as you have children, with the goal of living off the rentals, and leaving the assets intact to pass down to future generations.

How would you feel if you could set up a family dynasty in this way? Would your children see you as incredibly far-sighted as they appreciate the substantial property inheritance that this strategy makes possible?

The Westbank study highlights that a dramatic transfer of wealth to future generations is going to take place. Your children could be amongst those who benefit, provided you put the right strategy in place while there is still plenty of time to do so.

If you would like to learn more and discuss how McCarthy Group can assist you, click here.