Based on studies done, analyzing data from the ABS up to the June Qtr 2019, the findings indicates that Asset-rich and cash-poor Baby boomers areconverting equity from their homes into cash for a better lifestyle in retirement, otherwise known as 'Reverse Mortgages', what this means is that the baby boomers are spending $1 billion or moreevery year on their children’s inheritance. As asset prices decline, the decline is value is compounded with the draw down in equity, when they sell the property to distribute the inheritance money.
What is surprising is that the majority of he home loan market is owned by Gen X & Baby Boomers. Over the past decade, Gen X have been selling their existing homes and upgrading their homes. Refer to the below chart.
They key finding in this is that the largest group exposed Gen X & Baby Boomers faces a grim future as unemployment is on the rise, industries are crippled and their position in the work cycle (time close to retirement). Their chances of a a recovery are not looking good.
Additionally, The number of people aged over 50 and looking for work is rising. Older Australians are the fastest-growing cohort on Newstart payments. Women aged 65 to 75 are also the fastest-growing cohort becoming homeless.
As the traditional safe havens, bonds, dividend paying stocks, funds have all been hit, retirees who rely on the yields to assist in their retirement are now seeking other forms of capital investment. If they are investing into stock market, god help them.
Keep in mind that no group is spared, this financial crisis doesn't discriminate, all will be caught in the destruction.
This only analyzes the housing market.
What is even more scary is the size of the corporate/business loan market. Most are not backed by assets. Only their goodwill which is an intangible assets and basically worthless.. Meaning, the banks won't be able to recover much at all...
CI1 Price at posting:
2.9¢ Sentiment: Buy Disclosure: Held
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