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Evidence continues to mount that it is much harder for younger generations to get a foothold in the property market.<\/p>\n
Evidence continues to mount that it is much harder for younger generations to get a foothold in the property market.\u00a0<\/p>\n
The harsh statistics presented by years of Census data are undeniable and track the continued decline in home ownership since the 1940s.\u00a0<\/p>\n
Unveiling a slow and steady decline in home ownership for young people, the Census data shows that in the period 1947-1951, 54.2 per cent of people aged 25-29 were homeowners.\u00a0<\/p>\n
But by 1971 this had dropped to 43.5 per cent, and 20 years later in 1991 was 37.4 per cent \u00a0– and the latest data from Census 2016 shows that 15 years later home ownership for young people is still at this low level of 37.4 per cent.<\/p>\n
While we need to wait until 2022 to see the results from the 2021 Census, it is a sure thing that the home ownership data will have declined further for young Australians.\u00a0<\/p>\n
Home ownership is something young Australians are delaying and this is a generational pattern that shows no signs of ending.<\/p>\n
It has never been harder for first home buyers to get into the property market.\u00a0<\/p>\n
And as if it isn\u2019t already hard enough, NAB recently predicted Sydney’s house prices will rise by 17.5 per cent over 2021, making it even harder to get on that property ladder.<\/p>\n
The Australian Prudential REgulation Authority has also signalled change is on the horizon for borrowers, tightening home lending criteria with tougher serviceability rules. The minimum interest rate buffer on home loan applications has just increased from 2.5 per cent to 3 per cent.\u00a0<\/p>\n
Commentators say this could reduce borrowing capacity by around 5 per cent on a typical loan and with average house prices over $1 million \u2013 that can translate to $50,000.<\/p>\n
And all this hits hardest on first home buyers who need to once again lower expectations, save more and wait.<\/p>\n
But it already takes up to six years for the average Australian first-home buyer to save a 10 per cent deposit according to Canstar, almost double the time it took in 2006.\u00a0<\/p>\n
And the median house price has more than doubled in this time from $470,000 to a mind-blowing $1.05 million.<\/p>\n
Media headlines obsess on housing affordability, but the real stumbling block that keeps home ownership unattainable is the first hurdle –\u00a0 the upfront deposit requirements.\u00a0\u00a0<\/p>\n
Affordability only impacts existing homeowners or those that already have their deposit saved and measures the percentage of their income needed to service a mortgage.\u00a0<\/p>\n
And affordability doesn\u2019t represent the people locked out of the property market that are desperate to buy – but simply can\u2019t because of deposit requirements.<\/p>\n
The Australian Government has recognised the deposit as a significant obstacle and addressed it in the new First Home Buyer Scheme (FHBS).\u00a0\u00a0<\/p>\n
The scheme allows first-home buyers to purchase a home with a 5 per cent deposit of the property value and avoid paying costly Lenders Mortgage Insurance.\u00a0<\/p>\n
It is great to see the scheme introduced and the government acknowledge the deposit is the stumbling block and insurmountable hurdle keeping many locked out of the property market.<\/p>\n
Without help to get over the deposit hurdle, a typical buyer would need to delay purchasing for several years.\u00a0<\/p>\n
And so, the cycle continues \u2013 with buyers trying to save a deposit amount that continues to escalate and remain out of reach.<\/p>\n
There are literally thousands of people in stable employment with strong incomes that struggle to save the massive, ever-increasing sum for a deposit.\u00a0<\/p>\n
Especially when the property price and relevant deposit amount both increase relentlessly every single month for years.<\/p>\n
Can the next generation of home buyers be the first to buck this 70-year-old trend?\u00a0<\/p>\n<\/p><\/div>\n