Majority of Australians doubt they can pass on property wealth

More than half of Australians believe they will not be able to hand down property to their children, according to new research from financial comparison platform Money.com.au.

A survey of over 1,000 Australians found 53% do not think homeownership or property investment will allow them to pass on wealth to future generations in the way earlier generations did. The remaining 47% believe they can.

The findings come as the federal government moves to overhaul property investment settings, including changes to negative gearing, replacement of the 50% capital gains tax discount, and a ban on self-managed superannuation funds borrowing to invest in residential property.

"Property has traditionally been seen as one of the most reliable ways to build wealth through capital growth and rental income, and to create some financial legacy for future generations," said Nick Burgess (pictured right), property expert at Money.com.au. "But now, more people believe that opportunity is slipping away and confidence in bricks and mortar is eroding."

Confidence lowest among older generations

The survey found older Australians were the least likely to believe they could pass on property wealth. Among both Generation X and Baby Boomers, 56% held this view, compared with 47% of Millennials and 46% of Generation Z. 

"Older Australians are the generation closest to passing on their wealth, so they're naturally more sceptical about how changing affordability and investment settings could affect what they'll actually be able to leave behind," Burgess said. "If they're losing confidence that property will deliver the legacy they once expected, that's a significant shift.

"On the other hand, younger Australians are likely more focused on the challenge of buying their first property than the practical realities of one day passing wealth on to their children."

Affordability cited as the main barrier

Asked why they no longer viewed property as a means of building generational wealth, 51% of respondents pointed to high property prices and mortgage costs as the main barrier to entering the market.

A further 27% said wage growth had not kept pace with housing costs, while 22% cited government taxes and policy settings as factors reducing returns on investment property.

"Affordability remains the biggest obstacle, but it's notable that many Australians believe government policy is making property investment less rewarding," Burgess said. "Changes to negative gearing, CGT concessions and SMSF borrowing are pouring cold water on the aspirations of millions of Australians, many of them mum-and-dad investors, to build wealth through property and pass it on to their children and grandchildren."

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