‘Back in my day’ was it really easier to buy a home?

The dream of owning your own home has been integral to the Australian way of life for decades. But over those decades, has achieving the goal grown harder?

A new report from the Australian Housing and Urban Research Institute (AHURI) unequivocally says yes: Australians need a higher percentage of their income to buy a first home now than they did in the late 1980s.

Moreover, successive cohorts of Australians have experienced lower rates of home ownership at any given age: home ownership rates at age 30 have fallen from a high of 65 per cent among those born in the late 1950s to around 45 per cent among those born in the 1980s

And as time has gone on, the percentage of people who own their home at any given age hasn’t caught up.

AHURI revealed that the percentage of Australians who have been able to buy a home by the age of 50 has been on a steady decline—meaning that as Australians buy later in life, younger cohorts do not close the gap and catch up with their older counterparts.

After 10 years, less than half of the gap at age 30 to 34 years has closed, and between two-thirds and three-quarters of the gap is closed after 20 years. The institute warns that on this current trajectory, as individuals reach retirement age, it is likely that home ownership rates will be lower than in earlier generations, and more and more Australians will be lifetime renters.

Increasingly, younger Australians have needed to rely on their parents for a path to home ownership. This comes largely in the form of cash assistance for the upfront costs – deposit and stamp duty – of buying a home. After all, the so-called “bank of mum and dad” is estimated to be among Australians’ top 10 lenders, according to AHURI.

But AHURI’s data also shows that the longer Australians live under their parents’ roofs, the easier it is for them to afford a home of their own down the track.

Professor Stephen Whelan of the School of Economics at the University of Sydney, one of the authors of the research, explained:

“While transfers of cash from parents to children is part of that family support, there is also an increasing tendency for younger Australians to reside in their parents’ home. This allows younger Australians to accumulate savings in the order of $300–$400 per week that can be used to buy a home.”

The report reveals that every additional year that a young person lives at home, as opposed to renting elsewhere, leads to an increase in the odds of transitioning into first-time home ownership of approximately 30 to 40 per cent.

“Similar to direct money transfers, this in-kind assistance provides an important, albeit informal, way into home ownership,” Mr Whelan commented.

Though he noted that as this support becomes more common for Australians looking to buy, the gap between those who have access to generational wealth and those who do not will continue to widen.

“One consequence of intergenerational transfers from parents to children is the increase in the level of inequality in the society,” Mr Whelan said, noting that the line between the haves and have-nots is very clear when it comes to intergenerational wealth and housing.

“In Australia, wealth is clearly associated with housing tenure; over the period 2002–2018 the largest growth in wealth was observed among (often older) outright home owners while renters, the least wealthy group, experienced very limited increases in wealth,” he noted.

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