Australians might have lost hope that younger people can own a home, but experts claim the great Australian dream is not dead.
Although home ownership remains a key aspiration for 88 per cent of the nation, nine in 10 people believe younger Australians may never own their own home, YouGov research commissioned by RSL Art Union finds.
One-fifth of Australians believe it’s too difficult to save for a deposit in the current climate, with Millennials and Gen X almost twice as likely to share concerns of never owning a home as Baby Boomers.
The cash rate is sitting at a decade-high of 3.6 per cent, and although rate increases were paused this month, the Reserve Bank of Australia is expected to further hike rates to lower inflation.
National home values are trending downwards, but price rises during the pandemic mean properties remain expensive in most capital cities.
Louis Christopher, managing director of property research firm SQM Research, said while these factors mean borrowers’ purchasing power has been reduced, the popular goal of home ownership is not dead and buried.
“[The Great Australian Dream is] not dead. It’s just been put on ice for quite a few people at this point in time,” he said.
Many home buyers got in early
Australian Bureau of Statistics data shows clear spikes in new loan commitments for owner-occupiers from mid-2020.
But since the start of 2022, there has been a significant decline, with new loan commitments for owner-occupier housing in February 30 per cent lower year on year.
Some of that downward trend could be attributed to the rush of first-home buyers seen in the early years of the pandemic, helped along by government initiatives like the HomeBuilder grant, said University of New South Wales senior research fellow at the City Futures Research Centre, Chris Martin.
“We’re on the other side of the first-home buyer spike, where a whole lot of potential home buyers … came forward in a big rush to get in, and now they’ve got their homes and those numbers are down,” Dr Martin said.
Despite the recent spike in first-home buyers, a Finder survey showed 37 per cent of people who don’t own a home believe they will never be able to afford to buy a home, a substantial increase from 23 per cent in 2021.
“For those who want to buy a home and feel like they’re going to be renting forever, I have heard this for many years in my career,” Mr Christopher said.
“When I was in my early twenties, I thought briefly the same thing as well.
“Once we see a pause in the cash rate, we’re going to see more first-home buyers enter into the marketplace.”
But Australia’s rental sector is not making the situation easier, he said.
Rental crisis builds pressure
SQM Research data shows national rental vacancy rates at 1.1 per cent in March.
Meanwhile, rents nationally have risen by 21.8 per cent in the year to April 12.
The national median weekly rent is $568 per week; Sydney recorded the highest rent with a median of $962 per week.
“Who would you rather be right now – a renter in the midst of a rental crisis, or a first-home buyer facing very high interest rates?” Mr Christopher asked.
“There’s no question it’s a very difficult time to be … someone in their twenties on a smaller wage and salary, dealing with these two forces that are out there at this point in time when it comes to accommodation.”
Dr Martin said the current rental market is hostile due to the population moving back to regions like Sydney and Melbourne following a mass exodus during lockdown times.
An increasing number of international travellers and students have also put pressure on the market.
More needs to be done to address the stresses facing renters, Dr Martin said.
This includes non-market social housing for low to moderate-income households, further developing Commonwealth Rent Assistance, and looking for alternatives to the RBA’s monetary policy to combat rent inflation.
“Interest rates are notoriously the only tool in a monetary policy kit for dealing with inflation, and it is not dealing with rent inflation [and] so many other things,” he said.
“So we need to be doing other things apart from monetary policy to deal with inflation; more sector-specific regulation.”
