Australia is on the cusp of its largest-ever intergenerational wealth transfer, with an estimated $3.5 trillion in assets set to change hands over the next few decades. This monumental shift is already influencing how Australians approach financial planning and property ownership.
New data from online estate planning service Willed.com.au reveals that younger Australians are increasingly proactive about protecting their assets. The survey found that 57% of will makers were under 45, with 38% citing property ownership as their primary motivation for estate planning.
“We’re seeing a significant shift in how younger Australians approach financial planning,” says David Kaplan, co-founder of Willed. “Property ownership is increasingly becoming the trigger for broader financial planning, including estate planning.”
The wealth transfer is expected to have major implications for borrowers.
1. Increased Property Market Activity
As baby boomers transfer wealth to younger generations, many beneficiaries may use their inheritance for property deposits or mortgage repayments. The survey found that 64% of respondents were first-time will makers, suggesting a new generation getting their financial affairs in order.
2. Changing Lending Patterns
With significant wealth transferring to younger Australians, lenders may need to adapt their services. The survey showed that 80% of respondents valued convenience and digital access, indicating a preference for modern financial services.
3. Financial Planning Priorities
The data revealed that 85% of respondents felt relieved after completing their will, suggesting that estate planning is a significant source of financial stress for many Australians.
Impact on Property Markets
This transfer of wealth is likely to have significant effects on Australia’s property markets. As younger generations inherit substantial assets, we may see:
Increased competition for properties in desirable areas
Growing demand for first-home buyer properties
Rise in property investment by younger Australians
Shifts in property preferences as younger buyers enter the market
Planning for the Future
For potential borrowers, understanding how this wealth transfer might affect their financial position could be crucial for future planning. Whether you’re expecting an inheritance or planning to enter the property market, having a comprehensive financial plan – including estate planning – is increasingly important.
The survey also found that 73% of respondents over 60 were updating existing wills rather than creating new ones, highlighting the importance of regular financial planning reviews as circumstances change.
“As this significant wealth transfer unfolds, it’s crucial for Australians to think holistically about their financial future,” Kaplan says. “This includes considering how inheritance might affect their borrowing capacity and investment strategies.”
Looking Ahead
The next decade will likely see significant changes in Australia’s lending and property landscape as this wealth transfer takes effect. For those considering entering the property market or expanding their portfolio, understanding these emerging trends could help inform better financial decisions.
Key considerations for borrowers:
Review your financial planning strategy regularly
Consider how potential inheritance might affect your borrowing capacity
Stay informed about changing market conditions
Ensure your estate planning is up to date as your financial situation evolves
Think about how you might use inherited wealth to reduce existing debt or invest in property
As we enter this period of unprecedented wealth transfer, being prepared and informed will be key to making the most of the opportunities it presents.
