New Study Shows House Ownership Is Becoming a Distant Dream for Australian Millennials
Most Australian millennials are now pricing themselves out of the housing market as they choose to pay for higher rental rates instead of creating a fund to get a new home. This, according to the recent study conducted by the Australian Institute of Health and Welfare.
The report revealed that the number of privates renting increased dramatically from 18.4% up to 25.3% for the past decade. While the territory housing programs and household state proportions plummeted from 5.5% – 3.5%. The data for home ownership also decreased from 71.4% to 67.5%.
According to the report, the country is currently experiencing a shift when it comes to homeownership, where most of the millennials’ housing choices are greatly affected with various factors like lifestyle choices, work-home preferences, and economic constraints that limit their ability to save for their own house.
The Conflicting Results
This recent study seems to contradict the research conducted by Westpac Life. The data gathered by the latter company shows that more than a third of millennials are actually saving up for their homes. Most of their customers aging from 25-34 years old have a common goal of saving for a new home. These millennials also save 10 times more money to fulfill that goal rather than spending it on holidays or for traveling.
She added that millennials are often depicted as a generation who focus more on experiencing present life rather than preparing for their future. However, she believes it’s untrue. Their research shows that many millennials are seriously saving for their home deposits or, if not, they’re prioritizing on reaching their other goals than spending their money mindlessly on lifestyle trends and travels. Westpac’s claim also seems to coincide with the recent survey conducted by ING.
The Millennial’s Choices
According to the survey that was released last month, more millennials save to own a home for the next three years. The report shows that the average nominated deposit for millennials is around $76,000, with a 20% loan-value ratio. This amount can let an Australian millennial to buy a property worth $380,000, which is below the country’s national average of $570,000. The ING also offers an explanation as to why some millennials prefer to board a plane every six months.
The cost of travel has decreased compared to owning a property. Way back in 1981, the cost of booking a flight to London would cost you $9,452 in today’s money. While the median price cash deposit in Sydney was supposed to be 60, 809. However, in today’s money, a flight to London only cost around $1,300, while you’re required to place a 20% deposit for your house property – equivalent to an astounding $206, 778 for a median-priced house in Sydney. When you’re enduring from a lack of employment opportunities, student debt, and the high prices of properties go out of reach, it’s no wonder why most millennials tend to book flights instead of save for a deposit.
The Deciding Factors
Most millennials feel having a short trip is within their control since it’s more financially manageable for them compared to owning a house which is deemed to be a difficult dream to achieve. While the older generation claimed the reverse was true. The report also revealed other factors that affect the millennials choices like the declining rate of new housing allocations, changes in state housing programs, increasing the length of tenure in public housing, as well as the housing affordability in Australia. While the demand for an affordable housing continues to increase.
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