Despite growing financial obstacles between young people and purchasing their first home, research from BankWest revealed that the younger generations are still very optimistic about their real estate future.
According to CoreLogic data analysing house prices in the first quarter of 2021, housing prices rose 6.8%, the largest increase since 1988.
CoreLogic’s Head of Research Eliza Owen discussed the trend saying, “the Australian dwelling market has reached fresh record highs for the past four months, but the end of April marked the first time the total value of Australian housing broke the $8 trillion dollar mark”.
“This puts Australian residential property at around four times the size of Australian GDP, and around $1 trillion more than the combined value of the ASX, superannuation and commercial real estate stock combined,” she said.
“For many Australians looking to get a foot on the property ladder, the continued strength in the market is putting homeownership further out of reach despite record-low mortgage rates. Wages growth simply isn’t keeping pace,” she said.
Even with this unprecedented housing market boom, BankWest’s survey of 1600 Australian’s
from different age groups; GenZ, millennials and Gen X and Baby Boomers showed that the younger generations still aspire to homeownership.
Bankwest General Manager Home Buying Peter Bouhlas said that the study, which endeavoured to discover generational attitudes surrounding the housing market, revealed that every generation of Australians maintains the dream of buying their first home, but it’s clear the next generation feels this is increasingly challenging.
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What are Gen Z attitudes about homeownership?
From 1600 Australians, the data revealed that 71% of 14-22-year-olds would like to own a home in the future.
Of all the age brackets, the highest percentage of Gen Z were interested in homeownership.
Gen Z was also the most optimistic about whether buying a home was on the cards, with 38% of the group believing it was possible yet challenging, compared to Millennial’s 28%.
Despite the optimism and interest in the property market, 35% of Gen Z said they felt negatively about the property market, the highest number from all the cohorts.
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What are the challenges Gen Z face?
The current property boom is increasingly making homeownership more difficult, especially for the younger generations.
In addition to the ever-growing property market, 32% of Gen Z felt negative about their job security, and 45% of Millennials stated the same.
“We know the challenges of 2020 remain for many, and Gen Z, representing much of the young, casualised workforce of the country, often balancing study commitments, are greatly impacted by those challenges.”
“These results show how young Australians face the multiple pressures of increased financial strain, a fall in confidence for job security, and an understandable increased negativity towards the property market,” he said.
How will the property boom affect future first home buyers?
With property prices reaching record highs, the future of homeownership is uncertain.
And experts are now predicting that investors returning to the market will see owner-occupiers priced out of the market further still.
RateCity Research Director Sally Tindall speculated that the fact the number of owner-occupiers looking for their first home has dropped for the second month in a row could be the start of a worrying trend as investors start muscling in at auctions.
All hope is not lost for younger generations, as government incentives and out of the box thinking are helping get them into their first homes.
Parents are also lending a helping hand, acting as guarantors and assisting with deposits.
Shore Financial Chief Executive Theo Chambers said the Bank of Mum and Dad is helping a lot in the current market.
“Some parents aren’t that liquid in terms of assets … a lot of their wealth is tied up in property, so they provide support in terms of a guarantor loan,” he said.
“Some others do have liquid funds, and the ones that do would prefer to give their children the additional cash they need to make the 20 per cent deposit,” he said.
Rentvesting is another viable path to homeownership, where buyers choose to buy more affordable properties in rural or less desirable areas whilst continuing to rent.
Ben Plohl Founder at BFP Property Buyers said that first home buyers had been taking up the trend in the last six months.
“Rather than being forced to live in an area that they might not necessarily want to, they’re considering the rentvesting strategy. Put simply, it’s ‘Live where you want to live, invest where you can afford,” he said.
Words by Nell Matzen
- Gen-Z ‘Zoomers’ still focused on home ownership despite pressures
- Australian housing now worth over $8 trillion
- Fears first home buyers will be priced out of the market as investors return in droves
- Housing affordability: Rise of Bank of Mum and Dad fuels inequality in hot market
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