About two-thirds of young Australians have given up on ever owning their own home, a new survey has found.
A Resolve Political Monitor poll published on Monday showed 54 per cent of respondents on middle incomes and 63 per cent in the low income bracket think they will never be able to afford their own home.
The home-ownership despondency is also now stretching beyond young people to older people on middle and low incomes who don’t already own a home.
An astonishing two-thirds of young Australians have given up on ever owning their own home, a shock new survey has revealed
Property expert Michael Yardney is not surprised at the despair so many people are feeling about Australia’s housing market – one of the most expensive in the world.
‘There is no doubt that it is harder for first time buyers to get into the property market at present,’ he told Daily Mail Australia.
Housing in all five of Australia’s major cities – Sydney, Melbourne, Brisbane, Adelaide and Perth – has been considered ‘severely unaffordable’ since the turn of the century, according to the 2023 Demographia International Housing Affordability Scheme.
The Resolve Political Monitor survey, published in The Sydney Morning Herald, revealed the situation has become so bad there are now concerns the housing market is having a negative impact on the entire economy, affecting cities, governments and the Australian way of life.
Living standards and productivity are harmed by the property sector taking a growing proportion of people’s incomes, experts fear.
This, in turn, can change how businesses and employees make key economic choices – such as people whose skills are needed moving away from where those jobs are because they can’t afford to live there.
Ten straight interest rate rises from May 2022 to March 2023 have already made home ownership more difficult, and this was compounded by property prices rising last month for the first time in 10 months.
Since 2005, the median house price in Sydney and Melbourne has increased by 3.5 times the inflation rate and 2.5 times the increase in average weekly earnings.
Jim Reed, director of Resolve, said high house prices and rents meant younger people were being discouraged from entering the real estate market.
‘Many young people have simply given up on the dream of owning a home, at least in their early careers, and some are even telling me that they are giving up on having a family because they can’t afford to look after themselves, let alone more mouths,’ he said.
Mr Yardney maintained hope residents would still be able to afford a home, as long as they worked hard to save.
‘There is nothing new about this,’ he said.
‘I remember after property prices increased from the late 1980s that parents said their children will never be able to afford a house, and look what’s happened since.’
A Resolve Political Monitor poll published on Monday showed 54 per cent of respondents on middle incomes and 63 per cent in the low income bracket think they will never be able to afford their own home (stock image)
Economist Saul Eslake, who has long been a critic of Australia’s housing policy, said the situation has become so bad it is undermining the living standards of coming generations.
‘I don’t understand why younger people today aren’t out on the streets, protesting against their parents and their grandparents for what they’ve done to the cost of housing in this country,’ he said.
An Australian on an average salary wanting a house is now almost locked out of the inner cities or towns near the beach unless they are prepared to live in a flood zone.
Financial comparison Canstar calculated someone on an average, full-time salary of $94,000, would only be able to borrow $436,000.
If the prospective homebuyer was able to raise a 20 per cent deposit of $109,000, they would therefore only be able to buy a house or unit worth $545,000.
That is less than half Sydney’s median house price of $1,217,308, even after a fall of 14.7 per cent in the year to February, CoreLogic data showed.
The average-income Australian would also now miss out on the middle market house in the more affordable but isolated capital cities like Perth where $587,274 is the mid-point and Darwin where $585,836 is the median.
They are also priced out of Melbourne where $897,222 is the median house price, after an 11.2 per cent drop, along with Brisbane where $767,781 is the mid-point, following an 8.6 per cent decline.
How to save for a deposit while you’re renting
Work out your deposit size and price range
Do some research on where you want to buy, what sort of property you’re interested in, and be realistic about how much you can afford to pay in monthly home loan repayments.
This will help you determine your deposit size and give you a realistic saving target.
Create a budget
As a general guide (and depending on your lifestyle needs), you should allocate around 50 per cent of your income on living expenses (such as rent, transport, insurance and utilities), 25 per cent of your income on entertainment (such as dining out, movies and concerts) and roughly 25 per cent should go towards your savings.
Around 15 per cent of the amount you’re saving should go directly towards your deposit fund.
Find more ways to cut back on spending
Find a roommate, move to a cheaper suburb or consider downsizing to a smaller or older place. If you’re currently paying $300 per week in an inner-city location, consider moving to an outer suburb location where you might pay just $200 per week.
A $100 weekly saving may not seem like much, but this could add over $5,000 to your savings account each year, which could fast-track your way into the real estate market.
Look for a higher interest savings account
Open a high interest account that is dedicated to your deposit savings. You can separate your deposit funds from your other accounts and keep track of how much interest you’re earning each month.
When it comes to applying for a home loan, making regular deposits into a high interest savings account will demonstrate to the lender that you have good financial discipline.