Why This Matters Now — The Scale and Timing of Wealth Transfers

When most people hear “wealth transfer,” they think of inheritances: money or property passed down after someone dies.

That's the bulk of it, but it also includes gifts given while someone is alive (economists call these inter vivos transfers). Both matter for housing because they can fund deposits, pay down mortgages, cover renovations and shape family estate planning.

The Productivity Commission's 2021 report Wealth transfers and their economic effects (embedded below) found that in 2018 Australians passed on a little over $120 billion, about 6.5% of national income that year. Inheritances made up roughly $107 billion (close to 90%) and gifts less than $14 billion.

But the averages are misleading. The average inheritance was about $125,000, but the median (the middle point) was only about $45,000. For gifts, the average was around $8,000 and the median just $1,000. Most people receive far less than the headline average.

— a few very large inheritances pull up the average, while the typical Australian sees something more modest.

Inheritances generally arrive in your 50s, long after you're trying to scrape together a deposit. Small gifts tend to come in your early 20s, when they can help with stamp duty or a deposit top-up. (More on this below.)

So transfers are large in total and growing, but for most households they don't solve first-home affordability. Inheritances come too late, and gifts are usually too small to change the equation.

⚠️
Don’t plan your housing future around a windfall. Most inheritances are modest and arrive decades after you need them. If family help is realistic, focus on small, early gifts that can move the dial on deposits or mortgage insurance, rather than counting on a lump sum later in life.

What the Report Says About Inequality — Absolute vs Relative

Economists talk about two kinds of inequality, and the difference matters 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.

The equalising effect is smaller in Australia than in many other countries, because Australians transfer a smaller share of their wealth than, say, Europeans.

For housing, it's the dollars that count. Deposits, borrowing capacity and build budgets are in dollars, not percentages. A family receiving $40,000 might cover lenders' mortgage insurance or a kitchen upgrade. A family inheriting $400,000 is in a different league: a better suburb, a bigger build, or no debt at all.

Pay Here sign next to a tree
Pay Here Sign
⚠️
Don’t confuse percentages with lived reality. Wealth transfers may narrow the gap on paper, but in dollar terms the divide often grows — and in housing, it’s the dollars that decide whether you can buy, build, or upgrade.

The Next 25 Years — Projections to 2050

The report also projects what's coming: inheritances are set to get much larger.

Between 2020 and 2050, total inheritances are projected to nearly quadruple, driven by:

  • 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.

If today's retirees are wealthier than past generations, tomorrow's inheritances will be bigger. But bigger doesn't mean life-changing, because they'll still typically arrive in your 50s or later, after you've bought a home and paid down much of the mortgage.

The modelling assumes housing and financial assets keep rising and that super and aged-care rules don't change much. A sharp change in housing returns would change the projections.

For first-home buyers, a bigger future inheritance still isn't a plan. For older homeowners, it shows why estate planning matters: those assets will matter a lot to your kids.

Black buy sign being held up by a hand
Buy sign
💡
Expect inheritances to grow in size by 2050, but don’t treat them as your ticket onto the property ladder. They usually arrive too late to help with first-home buying — which means planning and self-reliance remain essential.

Housing’s Outsized Role

For most families the home is the single biggest asset, so housing is at the centre of how wealth passes between generations.

Older Australians hold much of their wealth in property, so housing values directly affect how much gets transferred, and the report finds wealth is highly sensitive to assumptions about housing returns.

Here's an 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, the housing market matters more to your finances than inheritances. Rising values grow estates for owners, but make it harder for younger buyers to get in. It's a double-edged sword.

Families with property in high-growth areas see their wealth multiply and pass it on. Families without property miss out today and pass on much less tomorrow.

Cat with green eyes
Worried cat
💡
Housing markets shape wealth far more than inheritances. If you own, rising values can swell your estate. If you don’t, those same values can keep you locked out — and no inheritance is likely to close that gap.

Gifts vs Inheritances — Who Gets What, and When

Gifts and inheritances differ a lot in timing and size, and that makes a big difference to housing.

*Gifts are usually small and early.* The average is around $8,000, but the median is only about $1,000, and they tend to come in your early 20s. Even a small gift can cover stamp duty or conveyancing, or top up a deposit to avoid lenders' mortgage insurance (LMI).

*Inheritances are larger but later.* The average is about $125,000 (median $45,000), usually arriving in your 50s. By then most people have bought a home and nearly paid it off, so inheritances tend to go to renovations, investments or helping the next generation.

So a modest gift in your 20s can do more than a large inheritance decades later. For parents and grandparents, the question is whether to help earlier, when it changes housing outcomes, or later, when it mostly adds comfort.

💡
Small, early gifts often do more for housing access than big inheritances that arrive too late. If family help is possible, timing it to when it matters most can make all the difference.

Implications for Homeowners and Buyers

Here are the practical takeaways.

1) Don't bank on an inheritance
It'll probably arrive after you've bought a home. Treat it as a possible bonus, not a strategy.

2) Timing matters more than size
A modest gift in your 20s (say $10,000 to top up a deposit or avoid LMI) often does more than $100,000 decades later. If you're thinking of helping, consider when it's most useful, not just how much.

3) If you're a parent, estate planning is housing policy
How you structure your will, super and property affects your kids' ability to buy. Most estates go to the surviving spouse first and only later to children, which delays support by decades. Clear, early planning (even partial transfers) turns wealth into real housing outcomes.

4) Watch the housing market, not just family promises
A one-point change in long-term housing returns matters more than inheritances. Interest rates, lending rules and local supply will likely affect your prospects more than 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 to know whether it's a gift, a repayable loan or a guarantee. Get advice from a solicitor and your lender before you accept family money. Some lenders need a signed gift letter, and a loan from family can reduce how much you can borrow.

💡
If family help is realistic, turn it into a structured, early plan — even small amounts can tilt the scales at the right time. But don’t delay your housing decisions waiting for an inheritance; market forces and timing matter far more than a lump sum decades down the track.

What This Doesn’t Tell Us (and What to Watch)

The report has limits. It tells us a lot about inequality, but not everything that matters for your housing.

1) No direct effect on house prices
The report doesn't model whether inheritances push up property values, so we can't draw a direct line to affordability. What we can say is that housing returns dwarf inheritances in their effect on family wealth.

2) Policy settings are assumed, not tested
The projections assume super, aged care, pensions and housing tax rules stay roughly the same. Changes to pension asset tests, super drawdown rules or negative gearing would change how much is passed on, and when.

3) Local supply and lending rules matter more day to day
Inheritances don't change housing supply or bank serviceability rules. Planning, building costs, interest rates and approvals shape affordability far more immediately.

4) The timing gap isn't solved
The report offers no fix for the biggest mismatch: inheritances arrive late, but housing needs start early. That's where families who can give early help make the biggest difference.

💡
Focus on what you can control. Inheritances may or may not come your way — but lending rules, housing supply, and your own planning will have a far bigger impact on whether you can buy, build, or stay secure in your home.

A Simple Checklist You Can Use With Your Family

Talking about money across generations can be awkward, but it's easier when you focus on practical decisions:

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? Get advice from a solicitor and your lender first.
  • 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?
💡
Turn assumptions into a written plan. Even small, early, well-structured help can be life-changing for housing. Vague promises, by contrast, usually come too late or cause more confusion than clarity.

Frequently Asked Questions (FAQs)

1) What age do most Australians receive an inheritance?
Typically in their 50s, long after the usual 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

Navigating Real Estate: Safety Guide for First-Time BuyersEmbarking on the home-buying journey in Australia? Dive into our guide to steer clear of scams and navigate the real estate market with confidence as a first-time buyer.Mastering Home Buying: Avoiding Sales TricksDiscover the secrets to secure your dream home! Avoid manipulative sales tactics and make informed decisions as a first-time buyer. Read the article now!man and woman walking on green grass field during daytimeBuilder or Land First? Key Tips for Starting Your Dream HomeEmbark on building your dream home with a strategic approach. This guide helps you decide whether to choose a builder or land first, weighing the pros and cons of each option. It covers cost considerations, availability, timelines, and expert advice for a smooth home-building process.A Crash Course in Australian Standards for New HomeownersCongrats on your new home! Understand Australian Standards for safety and compliance - they’re the law. Get a crash course to ensure your investment’s security.Australia’s Housing Boom: Impact on First Home BuyersThe Australian dream of home ownership is within reach, but the country’s housing boom may be both a blessing and a curse for first home buyers. Housing is one of the main pillars of Australia’s economy, driving job growth and supporting the major banks.Can You Negotiate a New Home Construction Contract?Learn how to navigate base prices, lot premiums, and closing costs to secure the best deal on your dream home.Solar & Efficiency Over EVs: Building a Sustainable HomeBuilding a new home? Shift your focus from electric vehicles to the real game-changer: how you power your home. Emphasize efficiency, solar, and battery storage to lessen grid dependence. An energy-efficient home not only saves money but also paves the way for a sustainable future.