Productivity Commission report predicts housing boom will make baby boomers ...

Productivity Commission report predicts housing boom will make baby boomers ...
Productivity Commission report predicts housing boom will make baby boomers ...

Baby boomers are expected to keep getting richer as young millennials miss out on the housing boom, a government report predicted.

The Productivity Commission is expecting the real estate boom to entrench the generational wealth divide with a think tank calling for taxes targeting older, richer Australians.

'The modelling also suggests that wealth will become more concentrated among older age groups,' it said in a research paper.

'The study shows that so far, each generation has been wealthier on average than the previous one at the equivalent age, though baby boomers have done particularly well.

Baby boomers are expected to keep getting richer as young millennials miss out on the housing boom, a government report predicted. The Productivity Commission is expecting the real estate boom to entrench the generational wealth divide

Baby boomers are expected to keep getting richer as young millennials miss out on the housing boom, a government report predicted. The Productivity Commission is expecting the real estate boom to entrench the generational wealth divide

'Historically high returns on housing, as well as wealth that is assumed to be inherited from partners in old age, are large drivers of this result.'

Brendan Coates, an economist with the Grattan Institute think tank, said a revival of inheritance taxes and an end to the 50 per cent capital gains tax discount would tackle the phenomenon of baby boomers getting richer at the expense of the young.

'We've got growing concentrations of wealth in Australia - it's not just amongst older Australians, it's also just amongst the wealthy,' he told Daily Mail Australia. 

'That is largely housing plus superannuation - if we don't do anything about that, then wealth inequality is likely to worsen in future.

'Inheritance taxes are a pretty efficient form of taxation, most economists are in favour of it because it's better to tax an unearned transfer of wealth than it is to tax income.'  

Record-low interest rates have helped older Australians accumulate more wealth, especially in Sydney where the median house price in the year to November surged by 30.4 per cent.

At $1,360,543, the mid-point price would be unattainable for a younger person on an average salary, CoreLogic data showed.

Even if a young Australian managed to eventually save for a $272,109 20 per cent mortgage deposit, they would still have a home loan of $1,088,434.

Someone earning an average, full-time salary of $90,329 would have a debt-to-income ratio of 12.

That is more than double the Australian Prudential Regulation Authority's danger threshold of six.

Record-low interest rates have helped older Australians accumulate more wealth, especially in Sydney where the median house price in the year to November surged by 30.4 per cent (pictured is a waitress in Sydney)

Record-low interest rates have helped older Australians accumulate more wealth, especially in Sydney where the median house price in the year to November surged by 30.4 per cent (pictured is a waitress in Sydney)

Sydney is far from the only metropolis with seven-figure prices, with Domain real

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