Wealth transfer accelerates as Boomers downsize, leaving Generation X with the largest stake in housing
Baby Boomer households continue to have the highest overall net worth in Australia, but Generation X now holds the largest share of wealth tied up in housing and equities, according to new analysis from KPMG.
The report, which tracks household balance sheets by birth cohort, finds Baby Boomer households have an average net worth of $2.46 million, underpinned by the largest holdings of cash and superannuation. Their portfolios now tilt more towards liquid assets as they move further into retirement.
By contrast, Gen X households have become the most heavily invested in property and land, with average holdings of $1.45 million, marginally ahead of Baby Boomers on $1.36 million. Millennials lag well behind, with average property ownership of $890,000.
Source: KPMG
KPMG urban economist Terry Rawnsley (pictured right) said these shifts underline the pace of intergenerational wealth transfer now under way. “The great wealth transfer is in full swing, as Baby Boomers start downsizing properties and moving that wealth into cash,” Rawnsley said.
“Baby Boomers are also beefing up their super accounts as they begin to spend in retirement or hand down wealth to their children. This has meant Gen X is atop the mantel as the wealthiest property owners.”
On a net-worth basis, Gen X sits just behind Baby Boomers, with average household wealth of almost $2.2 million. There is then a sharp step down to Millennials, whose average net worth is about $905,000.
Across cash and deposits – including balances in mortgage offset accounts – Baby Boomers hold the most at $220,000, followed by Gen X with $195,000 and Millennials with $115,000.
Gen X leads in share ownership, with average holdings of $235,000, ahead of Baby Boomers on $180,000. Millennials again trail both older cohorts, with an average share portfolio of $60,000.
Millennials also carry the largest debts, averaging $460,000 per household. Gen X follows at $425,000, while Baby Boomers have reduced liabilities to around $160,000 as most home loans and other borrowings have been repaid.
Property remains central to wealth building
The analysis confirms that residential property continues to be the main driver of wealth accumulation in Australia, particularly for those able to enter the market earlier in life.
"For young Australians able to get into the market they are starting to see strong growth, but for those aged under 30, many of whom have been locked out of housing, wealth accumulation will be a much tougher task,” Rawnsley said.
For households headed by someone aged 45–54, property dominates, with average housing wealth of $1.443 million. These households also hold around $278,000 in shares and $509,000 in superannuation, reflecting decades of compulsory super contributions, equity-market participation and home purchases made when price-to-income ratios were lower.
Households in the 35–44 age group show a similar overall wealth profile but have had less time to move up the property ladder. Their average housing wealth stands at $1.052 million and they hold slightly higher average debt than 45–54 year-olds, indicating less progress in paying down mortgages.
The 25–34 age group has a more stretched balance sheet, with higher leverage and shorter tenure in the property market.
“Many young people in this group are just entering the housing market, which leaves them with large mortgages,” Rawnsley said. “Combined with HECS debts, this makes them the most leveraged generation with an average loan size of $346,000, offsetting total assets of $899,000. With many young people locked out of the housing market, we may see more of this generation focus on share portfolios as a more accessible way to build wealth.”
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