REAL ESTATE KEY TO BOOMERS RETIREMENT WOES

11th July 2006

Property buyer's agents Property Wizards say real estate investments will go a long way towards helping WA baby boomers retire in a lifestyle they're accustomed to.

Managing Director Liz Sterzel said it was no secret that superannuation wasn't going to provide enough income for many baby boomers during their retirement, but she said it wasn't too late for many of them to create a rosier future through real estate.

"The baby boomers are still young enough to look at buying into great investment properties now to boost their retirement years and make sure they'll be able to continue the lifestyle they're currently enjoying," she said.

"Many of them are still earning good wages and, with their children mostly older and off their hands, have the disposable income to pour into property investments in areas achieving good growth.

"If they can pick up real estate that will grow in value over the next 10 years or so, that could make a huge positive impact on the quality of their retirement.

They could either sell the property down the track and make a sizeable profit, or have some cash flow in their retirement years by collecting rental returns."

Ms Sterzel said an example involving the purchase of a $350,000 property proved real estate investing could put baby boomers out in front during their post-working life.

"On a $374,500 loan covering the full purchase price and expenses, the cost to the buyer to hold that property would be around $150 a week - that's assuming typical expenses, a high income tax rate and a 3.4% rental yield," she said.

"If the property grows at 8.5%, which is the long term average growth rate for Perth, after 10 years the investor would have outlaid about $79,000 from their own pocket, but have accumulated equity of around $416,000.

"The benefits of such an investment can have a massive impact on the financial position of your average baby boomer."

Ms Sterzel said baby boomers downsizing the family home as they moved closer to retirement would also be smart to re-direct the surplus cash into other property investments.

"The baby boomers have shown themselves to have a love of real estate, staying in the property investment market when others were reconsidering their position," she said.

"This is probably due to the fact they're experienced enough to know the market cycle, but whatever the reason, if they stick to this strategy they're likely to enjoy a better lifestyle into their later years."

Ms Sterzel said there were some key areas providing opportunities to make retirement smoother for baby boomers.

"Coastal suburbs like Hillarys and those near the coast that have great access to the freeway and public transport systems, as well as sought-after lifestyle facilities, are proving strong and all indications are good for the years ahead," she said.

"Astute investors will also be seeking out the suburbs where there are plans to create more lifestyle attractions, such as marinas, shopping and restaurant or café strips."

For more information, please contact
Mr Trevor Dunkley
Director
Property Wizards
trevor@propertywizards.com.au
Tel: (08) 9381 7450