The “who is who” of real estate: 4 generation profiles

by Chris Lang on April 12, 2009

The who is who of real estateMany newcomers may find it difficult to understand the situation in our real estate market today. It resembles a giant puzzle and you can try your best to make sense out of it, but to no avail because one important piece is missing. I am talking about some background information, or more precisely, knowing the forces that operate beneath the surface.

Aussie population (just like in any other country) consists of generations and every generation has it’s characteristics, certain goals that it pursues, the stage in life it is at right now and , of course, a nickname.

Let’s start with baby boomers. Baby boomers are the generation that was born between years 1946-1961. The nickname implies the soaring childbirth rates 9 months after the WWII ended and the servicemen came home. Right now baby boomers are in their 40s, 50s or 60s, they are representing the high income bracket and are the major players in the real estate market. No wonder – they entered the workforce much younger than any of today’s young adults (age 21 as compared to 27), move out of their parents’ homes early and started to manage their own financed at a younger age. Also the house price to income ratio used to be 3.8 to 1 back then (whereas it is 9 to 1 now), which means that the housing was 3 times more affordable for baby boomers than it is now. This pretty much explains why many of baby boomers are high profile investors at present.

Generation X are people born in the 1965 – 1976. They are today’s young professionals and real-estate-wise can be characterized as apartments-favoring buyers. Their lifestyle demands living close to the CBD and being unable to afford full size houses, they compromise on the space but not on the location. On top of housing affordability issues generation X is paying more tax as compared to its predecessors, which makes it harder for them to purchase a full size house within 20 km of work.

Generation Me are people born in 1970 – 1990. The name describes the nature of this generation. These folks never had to put anything else above their own good. It’s not that they are selfish – they believe that everything starts with the needs of an individual. Right now they are in their 30s – 20s (or even teenagers), didn’t live long enough to make/save a lot of money, which means they are not wealthy, and therefore don’t affect much the real estate market.

Generation Y consists of people born between 1980 – 1995. They are the offsprings of baby boomers and have grown up during the longest boom in Australia’s history. Many of them fell victims of bad lending practices of financial institutions, in other words it means that they are up to ears in debt, and many more are heading there because banks are continuously targeting these young people, selling them pre-approved credit cards, etc. Generation Y’ers are not prepared to sacrifice their lifestyle, which makes them renters rather than home buyers, because there is no way they can afford to buy a property close to the CBD.

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