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Home ownership has long been synonymous with the Great Australian Dream, mainly because up until recently buying a house was an achievable goal for the vast majority of citizens. Not so in 2018: as a new report from the Grattan Institute highlights, home ownership rates are falling dramatically, especially among young people and low income earners. The report bluntly states that home ownership now “increasingly depends on who your parents are”.The research shows how, in the recent past, Australians on all incomes were able to buy houses in capital cities. But since 2012 house prices have risen 50 percent in Melbourne and 70 percent in Sydney, and as a result people are spending far greater proportions of their incomes on housing. And house prices are rising at a far greater rate than incomes.According to the Grattan Institute, this represents “a big turn-around from 35 years ago when all income groups had similar home-ownership rates” and consequently “many struggle for the quality of housing that their parents enjoyed.”It all comes down to saving for that 20 percent mortgage deposit. In the early 1990s, the report explains, it took around six years to save a 20 percent deposit for an average house. In 2018, it takes around nine to ten years. So—and we’re not talking a nice inner city Melbourne terrace, here—that’s an increase from a $42,000 deposit in 2008 to almost $70,000 in 2014.The report also concludes that young prospective home buyers are struggling with much higher HECS debts than their parents, who, let’s face it, probably studied for free. All this makes saving up for that deposit, or securing a mortgage in the first place, more difficult. Unlesssss… you happen to receive some help from mum and dad.It’s a more nuanced way at looking at the housing crisis: the split in home ownership isn’t so much along generational lines as it is class lines. Young people can still buy houses in Australia, they just need a cash injection from their cashed up boomer parents who purchased a bunch of investment properties in the '90s when prices were lower. Cool!“Rising house prices have contributed to greater inequality,” the report explains. “Increasingly, getting the benefits of home-ownership depends on the wealth of your parents.”So what’s to be done? The report recommends that governments push for high and medium density housing close to city centres, phase out negative gearing practices, and amend tenancy laws to make renting more attractive. It also makes the point that telling young people to move to regional locations is a bad idea—sorry, Barnaby Joyce.Follow Kat on Twitter
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