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The middle-aged generation is now the biggest holder of housing assets, overtaking Baby Boomers for the first time, according to KPMG analysis.
Generation X (Gen X) – those born between 1965 and 1981 – has officially overtaken Baby Boomers in property wealth as well as shares, as the older generation looks to increase their liquidity and pass their wealth on.
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New analysis from big four accounting firm KPMG has revealed that Gen X now holds an average value of $1.31 million in property, narrowly surpassing Baby Boomers ($1.30 million).
Gen X also has the highest ownership of shares, averaging $256,000, followed by Baby Boomers with $206,000, which KPMG said may indicate the older generation’s desire for “less risky assets” as they move into retirement.
This theory is further supported by the fact that Baby Boomers are leading the way considerably in terms of cash and deposits, holding an average of $242,000, with Gen X, Millennials, and Gen Z lagging behind with $176,000, $104,000 and $26,000, respectively.
KPMG urban economist Terry Rawnsley said that these findings are a result of Baby Boomers selling down their assets as they move into retirement.
“Baby Boomers are gravitating towards liquidity and higher cash holdings which reflect their inclination towards safer investments,” Rawnsley said.
However, even as Gen X has moved up the ranks in several areas, Baby Boomers have maintained the top position in regard to other assets, primarily superannuation and business assets, holding $641,000 compared with $586,000 held by Gen X.
Meanwhile, Millennials and Gen Z hold just $260,000 and $43,000, respectively, though Rawnsley said that their superannuation balances are likely to surpass the older generations significantly in the future; however it is important to note the impact the rising cost of living may have on this.
As such, Baby Boomers maintain a significant lead in terms of their average net worth, currently sitting at $2.31 million, followed in generational order by Gen X ($1.88 million), Millennials ($757,000), and Gen Z ($96,000).
Younger generations
Despite prospects for Gen X looking increasingly promising, younger generations appear to be facing a number of challenges in the pursuit of wealth.
This is highlighted by the significant gap in housing assets, with Millennials averaging slightly more than half that of the older generations ($750,000) and Gen Z significantly further behind with an average of $69,000, indicating challenges entering the housing market.
Although it is important to keep in mind the difference in years spent accumulating wealth, Millennials and Gen Z are also faring considerably worse in terms of shares, holding just $51,000 and $7,000, respectively.
“While the starter’s gun has been fired on the great wealth transfer, our findings still demonstrate a clear disparity in housing wealth between older and younger generations,” Rawnsley said.
“These lower levels of share ownership among younger generations indicate a cautious approach towards equity markets, possibly due to financial pressures and less cash to invest.”
Looking at the level of debt between the cohorts, Gen X ($448,000) and Millennials ($410,000) currently have the highest loan balances largely as a result of home loans.
Baby Boomers have an average of $82,000 as they work to pay down the remainder of their home loans before retirement, while Gen Z boasts the least debt with just $49,000, made up primarily of HECS and credit card debt.
[Related: Just 11% of Gen Z/Millennials used a broker in the last year]
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