Recent arguments (here and here) claiming that millennials cannot afford homes because they are “lazy” and unwilling to make “sacrifices” received a stiff rebuke last month when the 2016 Household, Income and Labour Dynamics in Australia (HILDA) survey was released revealing that entry level homes skyrocketed in value between 2002 and 2014, making home ownership far more difficult for younger Australians.
As shown in the below table, the 10th percentile of homes – i.e. the cheapest homes on the market – grew in value by 108% between 2001 and 2014, compared to 47% growth for 90th percentile properties at the top of the market:
Now, Core Logic’s Cameron Kusher has released data showing that the number of suburbs with $1 million median valued homes has more than doubled over the past three years, driven by the two major cities:
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In June 2016, there were 613 suburbs nationally with a median value of at least $1 million, up by 29% over the year… As the first chart shows, there has been a significant rise in suburbs with a median value of at least $1 million over recent years. In fact, the number of suburbs has increased by 125% over the past 3 years…
The data highlights the bracket creep that has occurred over the housing growth cycle, and how housing affordability in NSW (Sydney) and to a lesser degree Vic (Melbourne) has deteriorated. An increasing number of suburbs in these two states now have a median value of at least $1 million…
While housing demand overall may be slowing a little, we expect that with historic low interest rates, demand for premium housing is set to remain buoyant over the coming year. Subsequently we would expect in 12 months’ time even more suburbs to have a median value of at least $1 million.
The data is clear. The collapse in home ownership has nothing to do with younger Australians being “lazy” and unwilling to make “sacrifices”, but that housing has become structurally much more expensive.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
