The memories from my childhood and adolescence are peppered with flashbacks of family times, fragments of birthdays and other events, all of which I recall on occasion, like we all do I suppose.
And parents invariably play starring roles in many of those events.
Indeed I can still hear their sage advice playing over and over in my mind. At the time it seemed boring and relentless, but as I look back now, I find myself shaking my head in a deliberate acknowledgement of all parents of that era, and probably every generation.
After all, the provision of repetitive advice in the hope that something might just trigger a desire for their child to follow is the mandate of all parents everywhere.
So where am I going with this?
Well, you see, this is a blog about property. Bet you didn’t see that coming.
I don’t know of any of my contemporaries growing up in the 70’s, 80’s and beyond that didn’t hear the words “don’t go overseas, don’t buy that expensive car, SAVE for your first home” drummed into their brains, over and over again.
Our parents knew the value of property, they understood it as an asset class, and they knew it was that first vital step in creating wealth for retirement. And when I say they ‘understood’ it – they genuinely did. It was tangible - bricks and mortar appreciating in value and a fundamental necessity for life. This was the investment of choice, the foothold, the great Australian dream!
So like our fathers and their fathers before them, we’ve embraced property as a roof over our heads and a roof for others in the quest to build wealth, to support ourselves completely in retirement, and to not rely on the Government to do it for us – after all that’s what the Pollies want, right?
Or do they?
Fast forward to modern times. The introduction of tax incentives such as the ability to negatively gear investment property and the capital gains tax discounts have both over time helped underpin and support our road to retirement. These have been great motivators and in particular have provided a nice leg up for Baby Boomers devoted to the asset class that has always delivered – property.
But will this be the same for the next generation?
The Boomer generation have been widely criticised for pricing the next set of first home buyers out of the market; for largely doing what their fathers and fathers before them have done; and for building a retirement nest egg through property.
But supply and demand, foreign buyer interest and the machinations of our economy are not controlled by Baby Boomers – this group is simply doing what its been told.
This year has been particularly interesting as the bulk of the Boomer generation edges closer to ‘retirement’ age – and the potential shifting sands of taxation legislation, changes to superannuation and a softening property market weigh heavy on their heads and hearts. Very heavy. Political rhetoric isn’t helping either and many are suffering silently as their retirement dollar bounces with every word.
And bounce it does, because there’s no doubt that traditional retirement for most of us - gold watch, fishing rod, caravan - went out with the new millennium, and now as we struggle with accumulating what is ‘enough’ to live on as our work life winds down, we’re reminded by our present PM that it’s perhaps our duty to assist our children into the property market, in addition to supporting ourselves.
What? That wasn’t in the plan…
Our ‘plan’ to support ourselves in retirement is like a tiny dot getting larger and larger in our minds eye as we age. And the idea of living on the age pension (which is close to the poverty line, let’s not forget) is not in the ‘plan’ – so we heed the advice of our forefathers and invest in property and Super, only to have the rules continually change.
There appears to be no further encouragement in sight to be independent in retirement and many of us will run out of money before we get to 90!
I think that what Baby Boomers might like right now, today in fact, is a little certainty when it comes to the stability of the rules and regulations, but it’s not coming anytime soon with all the social and economic moving parts impacting almost daily.
And even though interest rates are at historical lows, the impact on consumer confidence is not cutting through to this generation – and recent data supports this.
So what of the next generations, the disenchanted Gen X’ers, the ‘wide-eyed’ Gen Y’s and ‘the yet to care’ Millennials? How will they view property as a wealth creation tool? Has the soundtrack of parental life advice changed for them?
AND…will it be up to us (as the PM suggests) to lift them into the asset class that WE know so well?
It might be – but at what cost to the retirement dollar?
If our fathers could speak to us today – I think they would tell us not to despair – yes, the goalposts are changing – but as a generation we must stay informed and focused.
Through the many cycles and political jousting, property will still be ‘king’ for generations to come – and while for the Boomers the road ahead may be bumpy – forcing many to fasten their seatbelts, spare a thought for the next generation planning for retirement. For them, ‘bumpy’ takes on a whole new meaning.