Australia is expected to see an unprecedented amount of housing wealth cascade down the generations as the Baby Boom generation enters old age, highlighting the importance of estate planning.

An unprecedented A$407 billion (around $374 billion) in housing assets will change hands between in Australia over the next 15 years as younger generations inherit property from their parents.

According to a research study by Bankwest, the projected inherited housing wealth over the next 15 years amounts to around 12 per cent of the value of total Australian households housing assets of A$3.5 trillion.

“The combination of rising property prices, an ageing population and high home ownership rates highlights that Australian households are likely to soon benefit from a record intergenerational transfer or inheritance,” Bankwest’s Inherited Housing Report says.

The transfer of wealth between generations, raising issues such as planning to mitigate inheritance taxes, is a constant wealth management issue around the world and is likely to gain importance as the Baby Boom generation reaches old age.

“The number of estates with housing assets, not including estates passing between married partners, is expected to almost double over the next 15 years,” the report said.

“It is anticipated to rise from approximately 35,000 in 2009 to 68,000 by 2025. In total there are projected to be approximately 875,000 estates with housing assets in the next 15 years.”

The report says that in 2009 Australians inherited A$16 billion worth of housing, but by 2025 this is projected to increase to A$31 billion a year, a rise of 93 per cent.

This transfer of wealth comes in the context of declining housing affordability, with younger generations finding it more and more difficult to get into the property market due to soaring house prices. Australian home ownership levels are declining slightly, but are still high by world standards at around 70 per cent.

"Baby boomers and generation Xers are likely to be the main beneficiaries, which should help to fund their retirement plans and consolidate their financial positions," said Vittoria Shortt, chief executive of Bankwest Retail.

Shorrtt identified three trends behind the pick-up in housing inheritance: the ageing population, high home ownership levels among older Australians, and rising property prices.

In terms of dwellings, in 2006 there were 1.3 million properties with homeowners aged over 65 years. People over 50 owned 2.9 million properties.

Across Australia’s capital cities, house prices have risen by an average of 6 per cent per annum over the last 20 years, representing an increase of 229 per cent over the period. That rise has accelerated in the past decade, up 139 per cent compared to 38 percent in the previous decade.