Why This Matters Now — The Scale and Timing of Wealth Transfers
When most people hear the term “wealth transfer,” they think of inheritances — the money or property passed down after someone dies.
That’s the bulk of it, but the definition is much broader. It also includes what economists call inter vivos transfers — gifts given while someone is still alive. Both are important when we talk about housing because they can fund deposits, pay off mortgages, cover renovation costs, or shape estate planning decisions for families.
The report (embedded below) finds that in 2018 Australians passed on a little over $120 billion in wealth, which works out to about 6.5% of national income that year. Inheritances dominated this figure making up roughly $107 billion (close to 90%), while gifts came in at less than $14 billion.
But here’s where the numbers can be misleading. The average inheritance was about $125,000, but the median (the middle point) was only about $45,000.
For gifts, the mean was around $8,000, but the median just $1,000. What this means is most people receive far less than the “headline” average suggests.
— a few very large inheritances pull up the average, while the typical Australian sees something more modest.
The report shows inheritances generally arrive in your 50s, long after the years when you’re trying to scrape together a first-home deposit or manage early mortgage pressure.
By contrast, small gifts tend to come in your early 20s, when they can make a difference for things like covering stamp duty or topping up a deposit.
For homeowners and buyers, this is a reality check. Yes, transfers are large in total, and yes, they’re projected to grow. But for most households, the timing and scale mean they don’t solve the first-home affordability challenge.
Inheritances are often too late to help when they’re most needed, and gifts — while better timed — are usually too small to change the equation in a major way.
What the Report Says About Inequality — Absolute vs Relative
When economists talk about inequality, they often mean one of two things: absolute inequality or relative inequality. The distinction sounds minuscule, but it has real-world implications for housing.
Absolute inequality is measured in dollars. If one person inherits $500,000 and another inherits $50,000, the dollar gap between them has widened by $450,000. By this measure, inheritances and gifts increase inequality, because wealthier families typically leave behind bigger estates.
Relative inequality looks at proportions instead. A $50,000 inheritance might represent a 50% boost to someone with a modest estate but only a 5% bump for someone with a million-dollar portfolio. On this proportional measure, inheritances and gifts can actually reduce inequality, because they raise the relative position of people with smaller estates more than those with larger ones.
The report shows both effects are true at the same time. Absolute inequality rises, while relative inequality falls. Put simply: the rich get richer in dollar terms, but the not-so-rich gain a bigger slice of the pie when you look at percentages.
There’s also an international angle. In Australia, the equalising effect is smaller than in many other countries. That’s because Australians transfer a smaller share of their wealth compared to, say, European nations where inheritances make up a bigger portion of lifetime wealth.
For housing, this distinction matters. Deposits, borrowing capacity, and construction budgets are set in dollars, not percentages. Even if inheritances reduce relative inequality, the absolute gaps can still grow.
A family receiving $40,000 can cover costs like lenders’ mortgage insurance or a kitchen upgrade. But when another family inherits $400,000, they’re in a different league entirely — able to buy in better suburbs, build bigger, or stay debt-free.
The Next 25 Years — Projections to 2050
The report doesn’t just look at where we are now — it projects what’s coming. And the headline is clear: inheritances are set to get much larger over the next few decades.
Between 2020 and 2050, the total amount of inheritances passed to the next generation is projected to nearly quadruple. Several forces drive this:
- Rising wealth among older Australians. Home values and super balances have grown strongly in recent decades, and much of that is still held by older cohorts.
- Demographic shifts. As the large baby boomer generation ages, the number of deaths will rise, which naturally increases the flow of estates.
- Family size. With smaller families, each child stands to inherit a bigger share.
These projections line up with a common sense observation: if today’s retirees are wealthier than previous generations, then tomorrow’s inheritances will be larger. But “larger” doesn’t always mean “transformative.”
Timing is still a hurdle. The typical age at which people receive an inheritance will still be in the 50's or later. That’s often after you’ve already bought a home, paid down much of the mortgage, or even helped your own kids into the market.
There’s also uncertainty baked into the modelling. The growth assumes that housing and financial asset values continue to trend up and that policy settings — like how superannuation or aged care is treated — don’t dramatically change. A sharp shift in housing returns, for example, would materially alter these projections.
For today’s prospective homeowners, the key message is: yes, inheritances are projected to get bigger, but that doesn’t make them a dependable plan for buying your first home. For older homeowners, it highlights the importance of estate planning — those assets are going to matter a lot more to your children than they may have for you.
Housing’s Outsized Role
One of the strongest themes in the report is just how much housing shapes wealth transfers in Australia. For most families, the family home isn’t just where they live — it’s their single biggest asset. That means when wealth passes between generations, housing is at the centre of the story.
The modelling shows that older Australians hold a large share of their wealth in property. This matters because the growth (or stagnation) of housing values directly affects how much gets transferred. In fact, the report finds that wealth accumulation is highly sensitive to assumptions about housing returns.
Here’s and interesting point: a 1 percentage point change in long-term housing returns has a bigger impact on wealth inequality than whether inheritances are included in the model at all. In other words, if house prices grow slightly faster or slower over time, that difference outweighs the effect of inheritances themselves.
For homeowners, this reinforces what many already feel instinctively: housing markets matter more than inheritances for your financial position. Rising property values can increase the size of estates, but they also make it harder for younger buyers to get a foot in the door. So, it’s a double-edged sword — existing owners benefit, but aspiring owners face higher hurdles.
The report also shows how concentrated this effect can be. Families with property in high-growth areas see their wealth multiply, which then passes on to their heirs. Families without property don’t just miss out today — they pass on much less tomorrow. Housing wealth, more than cash inheritances, sets the long-term trajectory for families.
Gifts vs Inheritances — Who Gets What, and When
Not all wealth transfers look the same. The report makes a clear distinction between gifts, given during someone’s lifetime, and inheritances, which come after death. For Australian families, the timing and size of these two forms of transfer make a huge difference.
Gifts are usually small and early. The average is around $8,000, but the median — what most people actually get — is only about $1,000. These tend to flow in people’s early 20's, often when kids are moving out, studying, or looking to buy their first car or cover a bond. In the housing context, even small gifts can play a role: they might be enough to cover stamp duty, pay for conveyancing, or top up a deposit to avoid lenders’ mortgage insurance (LMI).
Inheritances are the opposite: larger but later. On average, people inherit about $125,000, with a median of $45,000. The catch? The money usually arrives when beneficiaries are in their 50's. By then, most people have already bought a home, raised kids, or nearly paid off their mortgage. Instead of helping people get onto the property ladder, inheritances often end up going towards upgrades, renovations, investments, or helping the next generation.
For first-home buyers, this timing matters. A modest gift in your 20's can have more impact than a large inheritance decades later. For parents and grandparents, it highlights a strategic choice: should support be given earlier, when it can change housing outcomes, or later, when it may simply improve comfort in retirement?
Implications for Homeowners and Buyers
So what does all this mean if you’re buying, building, or already managing a mortgage? The report’s big-picture findings translate into a few practical takeaways.
1) Don’t bank on an inheritance
For most Australians, inheritances arrive in their 50's or later. By that stage you’ve usually already bought a home, taken on debt, and possibly helped your own kids. That means an inheritance may help with comfort and upgrades, but it rarely solves the first-home affordability problem. Treat it as a possible bonus, not a strategy.
2) Time matters more than size
A modest gift in your 20's — say $10,000 to top up a deposit or avoid lenders’ mortgage insurance — often has a bigger impact than $100,000 landing decades later. Small, early support can change whether you enter the market at all. Parents or grandparents thinking about helping should weigh when support is most useful, not just how much.
3) If you’re a parent, estate planning is a housing policy
The way you structure your will, super, or housing assets directly affects your kids’ ability to buy or stay secure. The report notes that most estates flow to spouses first, and only later to children — which delays support by decades. Clear, early planning (even partial transfers) can turn wealth into real housing outcomes rather than “too late” windfalls.
4) Watch the housing market, not just family promises
The report is blunt: a one-point change in long-term housing returns has a bigger impact on inequality than inheritances themselves. If you’re an aspiring buyer, keeping an eye on interest rates, lending rules, and local supply will likely matter more to your prospects than waiting on family money.
5) Treat family support like finance, not fairy dust
If gifts or loans are on the table, document them properly. Banks will want clarity on whether family support is a gift, a repayable loan, or a guarantee. Vague promises can derail mortgage applications; clear terms can make them viable.
What This Doesn’t Tell Us (and What to Watch)
The report is detailed, but like any model it has limits. It tells us a lot about how wealth transfers affect inequality — but not everything that matters for your housing future.
1) No direct effect on house prices
The report doesn’t model whether inheritances and gifts push up property values. Instead, it focuses on inequality measures and the size of transfers. That means we can’t draw a direct line from inheritances to housing affordability. What we can say is that house price movements and housing returns dwarf inheritances in their impact on family wealth.
2) Policy settings are assumed, not tested
The projections assume that key rules — superannuation, aged care, pensions, tax treatment of housing — stay more or less as they are. Any major reform could shift the story. For example, tightening pension asset tests, changing super draw down rules, or reforming negative gearing would alter how much wealth is passed on, and when.
3) Local supply and lending rules matter more day-to-day
For homeowners and buyers, it’s important to remember that inheritances don’t change the supply of new houses or the serviceability rules banks apply. Council planning, building costs, interest rates, and approval processes all shape affordability far more immediately than generational wealth flows.
4) Timing gaps remain unaddressed
The report doesn’t offer solutions for the biggest mismatch: inheritances arrive late, but housing needs start early. This gap is where most households feel the squeeze — and where families who can provide early gifts make the biggest difference.
A Simple Checklist You Can Use With Your Family
Talking about money across generations can feel awkward, but it’s easier when you focus on practical decisions. The report highlights patterns that can guide those conversations:
1) What’s realistic, and when?
- Most gifts are small (median about $1,000) and arrive in people’s 20's.
- Most inheritances are larger but typically arrive in the 50's.
Ask: Are we expecting modest early help, or something larger much later?
2) Should support come earlier?
- Even $10,000 early can make a huge difference to a first-home deposit or avoiding lenders’ mortgage insurance.
- By the 50s, many people already own property and have children of their own — later inheritances rarely shift home access.
Ask: Would smaller, earlier help do more good than waiting for a big lump sum?
3) How is the estate structured?
- Probate evidence shows most estates flow first to spouses, then to children. That delays wealth transfers to the next generation by decades.
Ask: Do our wills and super arrangements line up with how we want wealth to support the family?
4) Are aged-care deposits factored in?
- Refundable Accommodation Deposits (RADs) often aren’t included in surveys, but they flow back to estates — about $9.2 billion in 2018 alone.
Ask: Have we thought about how aged-care costs and refunds fit into the inheritance picture?
5) Have we documented the plan?
- Banks want clarity: is family support a gift, a loan, or a guarantee?
- Clear documentation avoids confusion — and ensures the support actually helps instead of tripping up a loan application.
Ask: Do we have this written down in a way lenders, lawyers, and beneficiaries can understand?
Frequently Asked Questions (FAQs)
1) What age do most Australians receive an inheritance?
On average, inheritances are received in people’s 50's, long after the typical first-home buying years.
2) How big are inheritances and gifts in Australia?
In 2018, the average inheritance was about $125,000 (median $45,000), while the average gift was $8,000 (median $1,000).
3) Do inheritances make housing more affordable?
Not directly. The report doesn’t model house prices, but shows that housing returns matter far more than inheritances for overall wealth outcomes.
4) Are Australian inheritances smaller than in other countries?
Yes. As a share of total wealth, Australians transfer less than many European nations, so the “equalising effect” of inheritances is smaller here.
5) Why do some inheritances go unreported in surveys?
Surveys like HILDA rely on self-reporting. Many people don’t record smaller inheritances, some don’t include aged-care deposits, and the richest households are often under-sampled.
6) What’s a Refundable Accommodation Deposit (RAD), and why does it matter?
RADs are large upfront payments for aged care (averaging ~$318,000 in 2018–19). They’re refunded to estates when the resident passes away, but surveys often miss them — in 2018 alone about $9.2 billion flowed back to families this way.
7) Do inheritances reduce inequality?
Yes in percentage terms (relative inequality narrows), but in dollar terms absolute inequality grows. That means dollar gaps that matter for deposits or renovations often widen, even if the ratios look fairer.
8) How reliable are the numbers in the report?
They’re directionally strong, but not precise. Non-reporting and data gaps mean the totals are likely underestimates, especially for high-wealth households.
9) Will inheritances really get bigger by 2050?
Yes. The report projects inheritances will nearly quadruple between 2020 and 2050, driven by rising wealth among older Australians, ageing demographics, and smaller family sizes.
10) If inheritances usually arrive late, what’s the practical takeaway?
Don’t wait for them to solve your housing problem. Plan on your own means. If family help is available, smaller gifts given earlier usually do far more good than larger inheritances that arrive decades later.
Further Reading
Anthony Painter
Anthony Painter
Anthony Painter
Anthony Painter
Anthony Painter
Anthony Painter
Anthony Painter
Anthony Painter
