Last week I argued in this column that the great baby boomer downsizing wave isn’t coming to save Australia’s housing market. 

Judging by the conversation the column sparked when I shared it on LinkedIn and X, the argument touched a nerve. 

One question kept coming back: If baby boomers aren’t going to downsize, what eventually happens to all those big family homes? 

Well, eventually everyone leaves home. For most boomers, it won’t happen because they downsize into a lovely two-bedroom apartment at 78 – it’ll happen because they die. 

That sounds rather grim, but demographically it matters enormously. 

Many boomers will spend the rest of their lives in the family home. Eventually there is only one person left in it. Usually that person is mum.

Australian women live several years longer than men on average and are married to older men, so the surviving parent is disproportionately female. She might spend years living alone in what was once a busy family home. 

Then comes the real transfer. The property doesn’t disappear. It enters the estate. 

I have written about this before.

In an earlier column I used a deliberately simplified demographic model that counted Australian women from the baby boomer and older generations and assumed they represented the last surviving parent.

I suggested that the 2030s and 2040s would mark the great period of intergenerational wealth transfer. 

Most baby boomer homes won’t be released by downsizing. They will be released by death. 

The chart uses ABS population projections to track the annual change in the number of Australian women born in 1963 or earlier. 

Think of this as a rough proxy for the last surviving parents of the baby boomer era. 

It isn’t literally a forecast of deceased estates. Some women won’t own homes. Some will still have partners. Some will have already sold their house or moved into aged care. The chart is a simplification. What matters is the shape of the curve. 

In 2021 there were about 3.3 million Australian women born in or before 1963. The annual decline in this population accelerates through the 2020s and 2030s before peaking at roughly 107,000 in 2041. There will be fewer than 1.5 million left in 2041. 

The 2030s and 2040s will therefore be the big decades for deceased estates, inheritances and the eventual release of homes occupied by today’s older Australians.  

This is the baby boomer downsizing wave we were looking for. It just comes later than expected, and the boomers themselves aren’t necessarily doing the moving. 

Imagine a straightforward case that will be repeated hundreds of thousands of times in the next 15 years. 

Mum dies owning the family home outright. There are about two adult children. 

Neither particularly wants to move back into the house they grew up in as both already have partners, jobs and homes elsewhere. Owning a house jointly with your sibling isn’t particularly attractive either. 

So, the siblings sell the house. Often this will be a property that hasn’t been on the market for decades. Usually, the baby boomer couple bought the house on what was used to be the urban fringe back then but is now an established middle-suburb. 

Sometimes the buyer might be a younger family looking for more bedrooms. It could even be an established homeowner upgrading.

Maybe an investor is interested. These baby boomer properties will be in need for major structural repairs and interior overhauls. The block of land is unusually big.

There aren’t enough families with sufficient financial resources out there to buy and renovate boomer properties. We will therefore soon see the townhous-ification of the middle suburbs.

A small developer will bulldoze the boomer house and squeeze two or three townhouses onto the block. 

This is where the housing implications of ageing become interesting. 

Will all these boomer homes and the townhouses replacing them crash the market? You could look at our demographic chart and imagine an enormous wall of housing about to hit the market. 

Surely that pushes prices down? 

At the margin, yes. More homes offered for sale means more choice for buyers and less scarcity. But we shouldn’t confuse a gradual increase in turnover with a housing tsunami. 

At the peak of our deliberately simplified chart, the older female population falls by about 107,000 in a year. 

Australia already records well over half a million residential property transactions in a typical year. 

Even if every one of those 107,000 demographic exits represented an additional property hitting the market, which they absolutely won’t, this would still be a meaningful but manageable addition to normal housing turnover. 

And the peak doesn’t arrive tomorrow. It builds gradually over more than a decade. 

Meanwhile, Australia continues to add millions of people who require somewhere to live. 

Supply from deaths rises. Demand from population growth and household formation rises too. 

This is why I wouldn’t bet on a national boomer-induced housing crash. 

On top of this, developers aren’t flooding the market with new builds and would slow construction if too many baby boomer homes were to enter the market. 

There is another problem with the idea that boomer deaths will suddenly hand affordable houses to 20-somethings. Inheritance tends to arrive relatively late in life. 

The Productivity Commission has previously estimated that the average Australian receiving an inheritance is around 50 years old. Millennials will mostly inherit money when they are in their late 50s. 

And this is where the housing story gets fascinating. Imagine mum’s $1 million home is sold, and the proceeds are divided between two children. 

One additional house has entered the market. 

But two households have also just received roughly half a million dollars each, before costs and whatever other assets sit in the estate. 

One child might pay off the mortgage. Another might finally upgrade into the larger home they couldn’t previously afford. 

Some will put the money into superannuation. Some might buy an investment property. Others will pass part of the inheritance straight down to their own children. 

The “bank of mum and dad” will increasingly be recapitalised by the “estate of grandma”. 

The same event that releases housing supply also releases purchasing power.  That’s why the inheritance wave isn’t automatically bearish for property prices. 

The scale of the transfer is enormous. The Productivity Commission has estimated that around $3.5 trillion in assets could be transferred between Australian generations by 2050. 

Enormous redistribution of wealth

A huge share of Australian household wealth sits in property.

So, the great boomer mortality wave isn’t merely a story about more “for sale” signs appearing outside old houses. It represents an enormous redistribution of private wealth. 

This also changes how we should think about generational inequality. For years we have framed the housing debate as boomers versus millennials. 

That distinction becomes increasingly meaningless once the boomers start disappearing. 

Imagine two 50-year-old millennials living next door to each other in 2040. 

One has parents who rented their whole lives and leave behind very little. The other’s last surviving parent dies owning a $2 million home outright. 

These two people belong to the same generation, but their financial positions are worlds apart. 

Increasingly, the important distinction won’t be boomer versus millennial. It will be inheritor versus non-inheritor. 

For younger Australians trying to get ahead, the question “what do you earn?” will remain important. The question “did your parents own property?” will matter more and more. 

Not every suburb will experience this equally, of course. National averages hide very different local housing markets. 

The eventual boomer housing release should be particularly visible in suburbs developed during the great suburban expansion of the 1960s, 1970s and 1980s. These places often contain large numbers of older homeowners living in detached houses on generous blocks. 

In desirable metropolitan suburbs, I doubt these homes will struggle to find buyers. In fact, the original house might not survive very long. 

A modest three-bedroom brick home on 700 square metres of valuable metropolitan land could become two townhouses, three villas or, where planning rules allow it, a small apartment development. 

That can be an extremely productive form of housing turnover. Plus, the densification of the middle suburbs through townhouses will put so much pressure on local traffic networks, kindergartens, and the suburban aquatic centre. 

The risks sit in ageing regional communities with little population growth. If 100 older homeowners die in a town and 120 younger households want to move in, prices will be fine. If 100 older homeowners die and only 60 younger households want their homes, prices won’t be fine. 

Demography doesn’t guarantee a national housing crash, but it can create local ones. 

Last week’s lesson was that Australia shouldn’t wait for baby boomers to downsize before fixing the housing shortage. This week’s conclusion is remarkably similar – don’t wait for boomers to die either. 

The great transfer of boomer housing will come. It will gather pace through the 2030s and 2040s and reshape property ownership, inheritance and household wealth.

But it won’t suddenly dump millions of unwanted houses onto the market. The process is too gradual. Australia is still growing. Many properties won’t be sold.

And when houses are sold, the proceeds don’t disappear. They become inheritances that create purchasing power elsewhere in the housing market. 

What governments can do is make this coming turnover useful. 

When a detached home on a large block finally changes hands after half a century, planning rules should allow that land to house more people where appropriate. 

Families should also think seriously about whether some wealth can be transferred earlier, when children and grandchildren actually need help buying homes, rather than arriving when the recipient is 50 and already owns one. 

Above all, Australia needs to keep building homes rather than treating the ageing of the boomers as a substitute for construction. 

The great boomer downsizing wave isn’t coming. The great boomer inheritance wave certainly is. 

Rather than crashing the housing market, its biggest legacy might be something else entirely.

It will lead to the largest reshuffling of property and private wealth Australia has ever seen. Some families and some regions are at risk of being left behind in the process. 

Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His podcast, Demographics Decoded, explores the world through the demographic lens. Follow Simon on Twitter (X), Facebook, or LinkedIn for daily data insights.