Good post, I haven't been on here for a few days, conversation deteriorates pretty quickly around here. Hope you are still reading...
I think it would be interesting to do some sums on future rent based on long term average inflation of say 2.5% pa and see how long the rent will be covered by the lump sum you have cashed out.
I am assuming that you are invested in shares or funds of some sort? Bank interest after tax is pretty miserable at the moment but will improve over the medium term as interest rates eventually start to rise.
Having sold recently I would say you are in a pretty good position to monitor the market and see what happens. Without knowing where you live it is hard to comment but given current ABS statistics that the Sydney and Melbourne populations are due to double by 2050 (within your 40 year time frame) I would suggest that buying a PPOR in the next 5-10 years or so might be a good idea. Property prices will more than likely flat line or drop backwards a bit for quite a few years after such a big run. But population growth will result in increased demand which most would argue will lead to further increases in property prices.
In reply to your comment about first home buyers in major cities. A lot of first time buyers are buying investment properties (mostly cheap apartments) and living either at home with their parents or sharing with friends/partners etc as a way of getting a foot in the door. In 10 years these people will have paid off some of their mortgage, had minimal cash outlay due to negative gearing and achieved at least some capital gain. This will then give them the ability to upgrade. Just one theory.
Regarding ageing population. This is key. No one can predict how this will play out. Life expectancy is growing quickly and forms part of the ABS population growth model. Baby boomers that are well funded will have no reason to sell, will more than likely assist their kids in purchasing properties and one day the kids will inherit the rest. Then having seen their parents make so much money out of it why would they sell? Maybe sell to split between siblings but then buy with the proceeds?
I guess what I am searching for is a reason that baby boomers will all of a sudden start selling property and I can't find one. Some may sell to fund retirement home living or just to free up some cash. But I just can't see a mass exodus. What do you think, any theories on this?
I don't subscribe to the selling to foreigners argument. It is a relatively small part of the market and even if they pay a bit more it is only a bit more than market value. So market value still exists. I also think there is a bit of fear mongering here. A lot of the so called foreigners are actually Australian residents.
Anyway, good post, I look forward to your reply and discussing further.
