Young Australians are struggling to get a foothold on the property ladder according to new research from the University of Melbourne.
The university’s recent Household, Income, and Labour Dynamics in Australia (HILDA) study found home ownership among 18 to 39-year-olds has declined significantly, from 36 percent in 2001 to 25 percent in 2015.
Consequently, more young people are living with their parents than in 2001. Sixty percent of men and 48 percent of women aged 22 to 25 years lived with their parents in 2015, up from 43 percent of men and 27 percent of women cohabitating with parents in 2001.
The decline in home ownership corresponds with incomes that have flatlined in the past five years. Together these factors mean it’s much more likely young people will find themselves renting well into their retirements.
“It’s creating a lot of negative sentiment among people in this age group,” Professor Roger Wilkins, the author of the recent HILDA study, told AAP. “It seems aspirations for home ownership haven’t really diminished a great deal. The attitude is they would like to be buying homes and they are finding it much more difficult.”
He added that unless Australian properties became much more affordable, young residents may never become home owners. This has significant implications for the wellbeing of these Australians, especially as they enter their golden years.
“Currently well over 80 per cent of retirees own their home, which makes things a lot easier when your income declines,” he explained.
Young Australians will likely have more superannuation than current retirees due to relatively new compulsory employer super contributions. However, Professor Wilkins believes many young Australians will need to spend much of their super balances to repay mortgages. This is problematic at a time when Australians are expected to live longer than current retirees, and thus need greater super balances to sustain them.
The statistics may be against you, but if you’re a young Australian that doesn’t mean home ownership is out of your grasp. At Chase Edwards, we can help you make the most of your income and build the deposit you need to buy your first home. Contact us on 1300 854 833 to arrange an appointment with one of our friendly finance experts.