The founding and current chairman of the National Housing Supply Council, Dr Owen Donald, speaking at the recent UDIA National Congress stressed that it is therefore important to understand the residential decisions and behaviours of this cohort and its impact on housing demand, supply and affordability.

Dr Donald says the complexities of the uncertainty surrounding how baby boomers will cope with the changing dynamics of the property market will offer both challenges and opportunities.

“We see the baby boomers as a pretty strong force in the market.”

“They are luckier than previous generations and they are luckier than subsequent generations in that they got into property when they could, en masse.”

Dr Donald says baby boomers have to choose whether to age in their existing homes, move in with their children, opt for a sea change or downsize to a smaller home in the same location they are living now.

These decisions by baby boomers will shape the market for many years, says Dr Donald.

“They are going to have wealth in super as well as in housing … so they have choices that previous generations haven’t had.”

But not all baby boomers conform to the stereotype of privileged owner-occupier enjoying a portfolio of financial assets to help fund a comfortable, leisure-oriented retirement, according to the latest NHSC report (“Housing Supply and Issues Report for 2012-13”).

Many Australians will continue to work long past 65, through choice but also out of necessity – not least given the shocks and uncertainty that prospective retirees face.

A significant minority of baby boomers will be left to compete in the private rental market, while some will face the prospect of paying off their mortgages with their superannuation. (This latter point has become a topical debate of late given evidence showing a trend towards retirees using lump sum payments from super to pay off their mortgage, increasing the prospect that they will require a government funded pension earlier on in their retirement.)

Like other buyers and renters, prospective retirees will face the problem of finding affordable and suitable accommodation, close to transport and amenities.

However, the NHSC report cautions that while metropolitan planning frameworks in Australia assume that Baby Boomers will represent an obvious market for smaller properties in well serviced, highly accessible locations, they may be driven by a number of factors that don’t align with these policies.

“Baby Boomers reaching retirement with financial and health security are less likely to downsize,” the report states.

“While it is appropriate to consider how more ‘efficient’ use of existing housing stock could be encouraged (to contemplate enablers and incentives to facilitate and promote downsizing), it is also important not to assume that the aged are more inclined than other cohorts to make financially efficient or ‘rational’ housing choices rather than respond to the non-financial attributes of neighbourhoods and homes.”

The report references a 2005 study that showed two-thirds of respondents wanted to stay in their present home and ‘age in place’.

This is supported by research on housing utilisation that found that over 90 per cent of older Australians regarded their home as suitable for their needs and that excess bedrooms are used to accommodate visitors and to pursue a range of retirement activities.

According to the 2011 Census of Population and Housing, over half of all people aged 65 and over lived in a private dwelling with their spouse or partner (56 per cent), another quarter of older Australians lived alone and a further eight per cent lived with other relatives, such as their children.

“Indeed, freed from the need to live near their workplace, some may be attracted to ‘sea change’ locations that have few of the services that most older people will need sooner or later, and/or they may be heavily influenced by the security and familiarity of their present neighbourhood; the location of family, friends and familiar service providers; the financial and emotional cost of change; the burdensome logistics of moving; declining resilience and adaptability; or simply inertia,” the report says.

Baby Boomers, in terms of their sheer numbers but also longevity post-retirement, will continue to shape the mainstream housing market, and the challenges associated with providing the right housing and services for these older generations will continue to emerge and exacerbate in coming decades as the number of over-65s rises from three to over eight million.

Six Baby Boomer housing paths

  • Age in place – This is the group that wants to, and is able to, keep living in the family home.
  • Local adapters – This is the group that has recently or wants to, and is able to, more out of their current home but keep living in the same area.
  • Scene changers – This is the group that has recently or wants to, and is able to, more out of their current home and area to somewhere with greater amenity.
  • Constrained retreat – This is the group that wants to keep living in their current home, or even the same area, but is forced to make compromises due to financial constraints.
  • Increased dependency – This is the group that wants to stay in their current home but has to make housing or location compromises due to deteriorating health.
  • Older renters – This is the group that has reached retirement without purchasing their own home and will need to retain or find ongoing rental accommodation.