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The research revealed that home buyers born in the 1980s are achieving home ownership “significantly less” than first home buyers (FHBs) born in preceding decades, with the rate of ownership being only 75 per cent of the rate in earlier decades after 20 years.
Entitled Transitions into home ownership: A quantitative assessment, the research was undertaken for the Australian Housing and Urban Research Institute (AHURI) by University of Sydney and RMIT University researchers to analyse the economic constraints over the last 40 years on people’s ability to purchase a home.
Over the last three decades, ownership rates for households at age 30–34 have “declined substantially”, dropping from 65 per cent of people born in the mid-to-late 1950s being home owners by age 30–34, to 45 per cent of people born in the mid-to-late 1980s, according to the research.
One of the authors of the research, Professor Stephen Whelan, stated the drop in the ownership rate came as house prices “have nearly tripled”, which indicated that rising prices and falling affordability are associated with “a delay in housing market entry for Australian households”.
“But more importantly, while this may represent in part simply a delay in younger Australians buying a home, our research shows that as these younger groups of people grow older, they are less likely to ‘catch up’ and buy a home,” Professor Whelan said.
“After 10 years the ownership rate ‘gap’ when comparing the 1950s cohort to the 1980s cohort (at age 40–44) has closed by less than half, and after 20 years (at age 50–54), the ownership rate is only around 75 per cent of the 1950s group.”
Professor Whelan added that saving enough for a deposit or a down payment was a key constraint that the younger generations are facing, taking over six years in markets such as Sydney and Melbourne to save for a deposit on an average dwelling.
Data released by comparator site Canstar’s First Home Buyer Survey found that while FHBs have increased average monthly savings by 13 per cent to $1,605 (up $188 per month from the same time last year), it still takes single home buyers eight years and eight months to save for 20 per cent deposit.
The increased savings cut the time to save for a 20 per cent deposit by “just shy of two years” for a single-income buyer, while a double-income couple saving $1,605 per month could cut time by almost one year and save for four years and two months.
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