What are the Baby Boomers?
Baby Boomers are a generation of adults that were born in the period after the second world war. The term came about as there literally was a ‘boom’ of babies born during this time. To be considered a Baby Boomer you would have been born during the period of the early to mid-1940s and 1964.
Baby Boomers had different habits to their parents in the previous generation. They were born at a time of increasing affluence, had a higher level of income, and saw a surge in consumerism. All of this meant they had a lot more money to spend on the things that they wanted – food, clothes, holidays, and property.
Buying a home was a common and reachable dream of Baby Boomers. Much of the generation own at least one property financed by working a full-time job.
We are entering an interesting time in the property world as many Baby Boomers will be retiring over the next 10-15 years, if they have not done already. So, what will their retirement mean for the property market?
What their retirement will mean
In previous generations there has been a natural attrition where workers move out of the central suburbs of Auckland within 10 years of finishing work, releasing their homes to the next generation of replacement workers.
But Baby Boomers are proving to have different habits.
For a start, Baby Boomers are traditionally working longer. Instead of retiring from work at 65, many are taking advantage of their fitness and health to work on until they are 70 (or more). The average Baby Boomer tends to be a lot wealthier than their predecessors and enjoys the lifestyle that they currently live. So they want to maintain it. That means working for longer and staying in their central Auckland homes for longer too.
Don’t get me wrong, some will sell up and move to the outlying areas of Auckland. Recently that has created mini property booms in places like Papamoa, Whangarei, and Hamilton. But as a whole, it will have little effect on the numbers that remain in the Auckland area.
Given that there are 1.04 million Baby Boomers due to retire within 15 years, there is a significant amount of workers that will need to be replaced. But where are these replacement workers going to live?
Auckland already has a problem with insufficient housing. There is currently a shortage of 70,000 houses. When you add 1 million extra workers to the equation, there will be a huge shortage.
So, what does this mean for the property market?
How this creates huge opportunities for property investment
The Baby Boomers are going to create a mini property boom in the central Auckland suburbs.
A shortage of houses will mean an increase in rental rates. Rent increasing will equate to higher yields, and result in higher price increases on homes in inner-city Auckland. We are currently in a buyers market because of government policies creating instability, difficult bank lendings, and no real solution to build in inner-city Auckland where the shortages are.
All of this points towards now being a great time to invest in Central Auckland.
Don’t be drawn into the hype of the outer suburbs. Investing in the outer Auckland mini-boom areas may sound like a good opportunity, however, these outer areas which are taking in retiring Aucklanders will have their problems when the retirees move on.
The age of the population in those outer areas is growing, so when they retire there will be surplus houses. By comparison, central Auckland is getting younger which is why that is the area we recommend investing in.
If you want to know more about how you could take advantage of this buyer’s market and invest in central Auckland property, then get in touch with Ron from Ronovationz today. Ron is a Baby Boomer himself and has an impressive personal property portfolio of more than 30 Auckland properties.