Home ownership has always been deeply embedded in the Australian psyche. For decades, it has been considered the ultimate emblem of financial and personal security and independence.
Today, however, the housing market has become a subject of dread for young Australians. They’ve watched housing prices and rents boom at a time when wages have been flat and there are no signs of respite. This is a bit more serious than an unjustified lament from the so-called “smashed Avocado” generation.
Home ownership rates are falling, with a particularly sharp decline among people aged under 34, and a similar increase in the number of people renting.
The mismatch between supply and demand is biting – and biting hard. Median house prices doubled in the decade to 2023 in some capital cities, while rental vacancies recently hit a new record low of 0.7%.
We’ve got approvals and construction rates lingering at the bottom of the cycle, while our population continues to rise.
We’re now a nation where the gap between the desire for home ownership and the ability to achieve it is as wide as ever. And it’s no longer merely a case of young people sensing that the dream of home ownership is distant – the financial stress they feel from housing themselves in the here and now is acute.
It’s primarily younger Australians, though we’ve increasingly seen the trend among single older women approaching retirement who have neither the benefit of owning a home nor a large superannuation balance.
Recent research commissioned by 89 Degrees East reinforced this trend. We tested the views of more than 2,000 Australians, asking about their dreams and the reality presented by the housing market, as well as their financial situation and how acute of a role housing costs play in the cost-of-living crunch.
Let’s start with what Australians want: 79% of Australians believe owning your home is an important life goal and 60% of Australians think that the best way to build personal wealth is through property ownership.
But when we peer into the fine print of the demographic data, we start to find a divide between generations.
For example, 87% of people who are homeowners believe there is value in owning your own home. But that number falls to 61% among renters.
The scarier number, however, is that 61% of Australians think the dream of home ownership is pretty much dead for young Australians – a statement 75% of renters agreed with.
The split between generations was amplified when we sought to assess the current levels of housing stress. Thirty-six per cent of Australians said they were in housing stress – defined as spending more than 30% of their income on housing.
The weight falls heavily on millennials, with 52% in housing stress. In fact, 30% of Australians aged 25-34 said there had been a time in the past 12 months when they did not have enough money to pay for their housing.
As a reference point, 56% of baby boomers – a generation dominated by home ownership and financial security – are spending 10% or less of their income on housing.
It’s not to say we’re all completely miserable. Forty-five per cent of people who don’t currently own a home believe they may have the opportunity to buy one in the next five years.
But in the meantime, they’re often dissatisfied with their living arrangements. Seventy-two per cent of Australians are satisfied with their current living arrangements, but dissatisfaction is concentrated among younger Australians, with only 25% of those aged 18 to 24 feeling content.
One area where governments and developers will need to get creative is ensuring that those with the most at stake are engaged in the public debate around housing policy and strategic planning.
Our research revealed those less likely to involve themselves are cohorts that already face substantial barriers to home ownership, such as young people, people in low-income brackets and people with lower educational attainment.
The emergence of the Yimby movement in some capital cities is encouraging, and should give a voice to people with an interest in seeing projects that are affordable, well designed and properly located advance.
There’s no time to waste. Our covenant as a society to leave the next generation with better fortunes than what we inherited has failed in the nation’s housing market.
Instead, younger Australians face an awful trifecta.
They are paying a premium for the roof they currently have over their head. The exorbitant costs they face today mean they are constrained in saving for tomorrow. And they risk becoming a generation lacking the lifelong benefit of home ownership.
The economic and social implications for governments and our civil fabric are profound. We’re always stronger when every Australian feels they have a stake in the nation – and home ownership has often served as proxy for that.
It’s incumbent on all levels of government to rise to the challenge.
Rebecca Huntley is director of research at 89 Degrees East. She is a fellow of the Research Society of Australia
