Listen up, kids. Mama is getting tired of all the Baby Boomer bashing and wants to say a few words.
We all know how difficult it is for the under-35s to break into the housing market. Property prices are obscene, completely out of range of most young people, and Lord knows if or when the situation will ever improve. I despair for young people trying to buy property today.
I do, however, take umbrage that it’s all the fault of Baby Boomers (born 1946-1960), which is pretty much all we hear. Baby Boomers have destroyed the housing market. Baby Boomers are gazumping Millennials in their endless rapacity to own as much real estate as possible. Baby Boomers are spending Gen Y’s inheritance. Blah blah blah. You’d think we were a bunch of Blofelds, swivelling in easy chairs stroking our fluffy white cats while planning world domination.
I’m no economist, social scientist or demographer, but there are a few other factors in play here, such as the fact that the world’s major capital cities (London, New York etc) just like Sydney and Melbourne, have had population explosions in the last few decades, coinciding with a tremendous increase in real estate values, due in part to increased demand for housing. As well, there’s foreign investment in the property market, corporate investment in the property market and the attractiveness in general of property as an investment option over the vagaries of the share market. Negative gearing, various other tax advantages and the relative ease with which investors can borrow large sums of money have made investment in real estate the preferred option of many, including Baby Boomers.
But here are some things for Millennials to consider. First, the world is always changing. There were massive economic and social changes when BBs were very young. We didn’t instigate the changes – we just happened to be there at the time. You know, Johnny-on-the-spot.
BBs didn’t start out rolling in this mythical wealth everyone seems to think we have. There’s no denying some of the definite advantages that came our way due to the accident of being born in that particular period of history. One example of an advantage enjoyed by BBs and not enjoyed today was free no-strings-attached tertiary education thanks to Gough Whitlam’s reforms of the early-mid 1970s.
You’d think we were a bunch of Blofelds, swivelling in easy chairs stroking our fluffy white cats while planning world domination. Spending Gen Y’s inheritance. Blah blah blah.
In the mid-1980s, when many of us in our twenties and early thirties were caring for our infant children, interest rates were around the 15-16% mark, reaching a peak high of 17% in 1989-90. That’s a lot of money to pay back the banks on housing loans.
Because we were busy paying off mortgages, we didn’t have money to invest in anything else. Sure, the price of houses was lower, but so were incomes. In 1985 the average weekly income was around $400 (in 1984, I was earning $259 a week before tax); in 2016 it was $1,500. In 1985, the median house price in Victoria was $75,000; in 2016 it was $800,000.
The ratios have certainly gone up ridiculously in the last 30 years or so, but that doesn’t mean that young BBs did it easy. Working couples raised kids and worked long and hard at their jobs. No-one I know had anything handed to them on a silver platter.
Generally, BBs have good lives, but we’re also under pressures previous generations didn’t face.
BBs are the first real “sandwich generation”. When we BBs were children, we perhaps saw our grandparents every second Sunday for a roast dinner. Many BBs today are part-time or even full-time carers for grandchildren, saving the parents of those children a bucketload of money. This caring – which I’m told is done willingly for love – means that many BBs have made a complete lifestyle change to help out their adult Gen X and Gen Y children. Those adult children have also often benefited from receiving tangible financial assistance from their BB parents – from staying at home longer and rent-free, to help with putting together a deposit for real estate, help with the mortgage, to buy a car, whatever.
As well as grandchildren, BBs are also caring for elderly parents. When our grandparents died, our parents were in their twenties, thirties and forties. Nowadays, there are plenty of BBs in their fifties and sixties who still have living parents for whom they care either on a practical or financial level, or both.
Also on The Big Smoke
- Housing affordability: We weren’t afforded the same chance, Dad
- Job-schmob: Gen Y forever blowing housing bubbles
- Inaccessible housing market gov’s grand design
So while many BBs are juggling work commitments with caring for elderly parents and young grandchildren, all we hear in the media is that BBs are ripping off younger generations. Geez guys, cut us a little slack. We’re not all sitting back collecting rents from our allegedly vast real estate empires and rolling about Scrooge McDuck-like in piles of cash, lighting our Cuban cigars with $10 bills.
Baby Boomers are also the first real generation to actively contribute to our own retirement via compulsory superannuation contributions. Nowadays, we have to work longer because governments keep raising the retirement age. Plus many have found that they don’t have nearly enough super to keep them into old age. That’s another thing – everyone’s living longer and money has to be made to stretch over that longer life span.
On top of that, it’s tough for older people to find employment. There might be rules and guidelines and anti-discrimination laws, but if you lose your job at 55, prospective new employers will not be knocking down your door to hire you. Because of this, many get a second mortgage on their homes, or downsize because they simply no longer have the income to service their loans. What I’m saying is that for every well-off Baby Boomer with a charming little beach house in Noosa, there’s another trying to make ends meet.
It’s true that the BB generation is relatively wealthy and healthy. That’s why we’re staying in our homes and enjoying life when we have time away from the workplace, the parents, the kids, the grandkids.
Young people have it a lot tougher in many respects – the costs of education, cars, rent and utilities, entertainment, and the biggest one – real estate – but please don’t label all Baby Boomers as wicked, calculating, avaricious, land-grabbing bastards. Baby Boomers are the parents of Millennials, the grandparents of Millennials. If we have the means, most of us will try to help our kids into the property market.
The reality is that housing affordability has always been an issue. Each generation faces its own financial challenges and each generation always wants someone to blame. Some BBs might be enjoying their investment unit overlooking St Kilda Beach or laughing maniacally as they bank the rents from their blocks of flats in Tasmania, but the majority of us are simply trying to enjoy what time we have left with the assets we’ve worked hard to acquire.
Anyway, Baby Boomers aren’t getting any younger. You may inherit something before you know it.
And here’s a heads-up – then it’ll be your turn to deal with taunts from younger generations.