There's now hard data definitively proving that young people can't afford to buy houses in Australia, and that if things don't change they won't ever be able to again. As of next year, it's projected that Australian homeowners will actually become a minority. Houses will be owned by couples over the age of 65, while everyone else will be funding P&O cruises in the form of rent payments.
These findings form part of the Household, Income and Labour Dynamics in Australia Report, released this week. It's a longitudinal study that has gathered data from the same 17,000 people all over Australia for 15 years. If you're interested in reading the full thing, here's the link.
What the study makes clear is that home ownership is decreasing as property becomes extravagantly expensive and out of reach. According to the data, Australian couples aged over 65 who have invested in the property market are by far the wealthiest in the country—since 2002 their average levels of wealth have grown by over 60 percent, as house prices soar. Meanwhile, young people looking to enter the property market are locked out by their parents and grandparents.
Speaking to VICE, author of the study Roger Wilkins explains how it shows our perceptions of Australian wealth and land ownership are way off.
"The study shows we're on track next year for less than 50 percent of people over 18 being home owners," he says.
"That might be surprising, because most people tend to think that two thirds of adults are home owners, but what they're actually thinking of is the number of people occupying homes, which is not the same thing."
Why is this happening? Well, the exact reasons you'd think. "In Australia we're seeing increased investor demand for housing, which has fuelled price increases and put housing out of reach for first home buyers," Wilkins explains.
"We're seeing more households buying investment properties, and that turns your attention to tax policies that might encourage that behaviour. Capital gains tax and negative gearing are helping fuel investor demand. There's no doubt in my mind that particularly removing the 50 percent capital gains discount would, over the longer term, improve housing affordability."
At this point, the easiest way to own property is to inherit it from your cashed up parents or grandparents."But that's a potential problem," Wilkins explains.
"This is the argument of the French economist Thomas Piketty—that we're moving into an age where inherited wealth matters more and more. Of course while parents are still living, that can potentially help with the purchase of a house for their children, giving them a deposit perhaps. But I think there is cause for concern about how equitable distribution of wealth."
As the study shows, our economy is changing. So much so that in the future it may mirror that of European countries, where home ownership is less common and renting is the norm. "So it doesn't necessarily have adverse economic implications, particularly in a context where we have a good superannuation system," says Wilkins.
Unfortunately, eternally renting does come with disadvantages. As Wilkins explains, people who own their homes tend to be more emotionally invested in their communities. On top of that, there's a certain satisfaction in being able to make renovations or changes to your own home. "Renting is not a substitute for homeownership, it's not as comfortable or secure," he says. "Homeowners have a stronger stake in broader Australian society."
For me, what's really cruel about all this is the constant rhetoric that millennials don't actually want to own houses in the first place. They're much too busy playing on their iPads and riding in ubers to settle down in the suburbs. As Wilkins explains, this argument seems designed to benefit a certain group.
"I don't think aspirations for homeownership have decreased as some people argue," he says. "But I think when young people say they don't want to buy a home, it's really in the context of 'because it's so damn expensive!'…if house prices were 50 percent of what they are now, those people would say they'd happily buy a home."
He might be onto something.
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