Housing dream a distant memory for Aussie millennials

The latest Perceptions of Housing Affordability report by CoreLogic has revealed that 83% of would-be first home buyers (FHBs) are worried about being able to afford their first homes, with 63% still living with their parents claiming they cannot afford to move out:

The household income to dwelling value ratio today is 6.5 times. So, the typical Australian household is spending, on average, 6.5 times their gross annual income to buy a medianpriced dwelling of $524,000. Less than 20 years ago it was 4.5 times.

The market is hard to get into. It takes an average of 8.7 years to save for a 20% deposit. That’s a long time; an eighth to tenth of a life.

And once you overcome that steep hurdle and get your foot in the door, you spend 35% of gross annual income to service your mortgage. That is a serious amount of disposable income you need to be able to service your loan.

Meanwhile wages growth remains insipid. Australians just haven’t been getting the pay rises required to help them save and pay for more expensive housing…

It’s not surprising, therefore, that while half of Australians thought affordability had improved in the past two years, more than 80% of Australians are still concerned about being able to afford their first or next home.

Affordability continues to have a significant impact on society and generations. The ‘cubby house’ syndrome where young people decide to stay at home with mum and dad – something we identified in our 2017 report – is alive and well. Some 63% of Australians who are still living with their parents say they can’t afford to move out of home (up from 62% in 2017)…


Nothing will change. Labor’s negative gearing and capital gains tax reforms are dead. There is minimal appetite to address land-use and planning restrictions. And immigration continues at insane levels, especially across our biggest and most unaffordable cities, which are projected to roughly double in size over the next 50-years:

Australia’s mass immigration program is particularly pernicious, since it adds hugely to structural demand, forces families to live in smaller housing (e.g. apartments), and also crushes the wages of younger prospective home buyers in particular, as noted recently by the Grattan Institute:

About three quarters of net migrants to Australia today are not high-skill, at least when they arrive… The stock of temporary students remains relatively low-skill…

Low-skill migrants might also put downward pressure on wages (if accurately measured). The measured wages of those aged 20 to 34 have not risen as fast as the wages of older workers for some time (Figure 7)…

Australia is now running a predominantly low-skill migration system. People from this system form a material proportion of the younger workforce.

Ironically, younger Australians are also the strongest supporters of ‘open borders’ and are usually the first to howl ‘racism’ or ‘xenophobia’ whenever there are calls to cut immigration.

They must be happy to work in low-paid ‘gig economy’ services jobs and to be confined to renting shoebox apartments for the rest of their lives.

Comments

  1. One of the top reasons we are getting the hell out of Australia. How the hell are my 2 sons ever going to afford a house when they are older. Friend of mine has his house on the market in Nashville Tennessee that’s about 25 k’ms from the CBD and a really good area for 200k. 3bed 2 bath on a 1/2 acre block. Blue collar kind of area.

    Great post UE

    • Great until he blames the young for immigration love.
      It’s not them that decided to open the gates. Why does everyone blame the young? BBs love to as does MB it seems. Sad start of affairs indeed.

      • True, but why aren’t they closing the gates. Younger people have the numbers to boot out all our major party politicians.

      • I thought about asking some of those ‘$700,000+ luxury weekender’ “owners” in the middle of buttf*ck nowhere northern NSW how do they manage, but I’m afraid the answer is either ‘poorly’ or ‘drug dealing’… or ‘sold up in sh*tney’

  2. Neither government party has any idea ‘how’ to repair the damage their policies have brought over the last 30 years to Straya’s people and so they won’t even attempt it. Better yet is the simpler, and more profitable path of doing what’s required before we ‘go to market’- a concept that everyone understands thanks to our obsession with property.

    It’s very clear now that there will be no return to the fair-go as all everything is about supporting the shareholders of the entities that benefit directly from Aus becoming another choked Asian megalopolis.
    And it’s also clear that there is no direction but ‘this’!

    Due to this inevitable certainty, and as we suffer and endure the hyper-rates of change the immigration invasion brings, we should not be surprised that the main function of our current gov’t is to achieve the ‘best’ prices from those who wish to buy us out. It’s the classic rentier business model we’ve embraced so happily and for so long now that auctioning our sovereignty will find only small resistance.

    If there was to be a movement to arrest what’s happening, it would have surfaced a long time ago with a vehement backing by the people. We’ll go quietly into the night. For the money! Scott and the Libs are just wholesalers now; nothing more or less. Their pathetic attempts to identify with the states-people who built this land only make their marketing campaign more hollow- their message is:
    “If you have the dough, you’ll get the go”

  3. It’s not an Australia only phenomenon. It’s worldwide. Moved back to Europe two years ago after a 12 year stint Down Under. The situation here is equally as bad. In thirty years GDP has quintupled, real estate prices quadrupled and real wages less than doubled so if you didn’t ride the BB wave of ‘monkey on chair getting dough’ you’re screwed sideways.
    Scary thing is: as a global phenomenon, the economic crisis for the young (they live in 1933 basically), combined with immigration policy and blind geriatric policy makers that have lost touch with reality is very reminiscent of the pre WWII time. The social TNT in this waits to explode – imagine what it’ll be like 15-20 years down the track. Living at the brink of homelessness watching others having a good life festers.

    • Jumping jack flash

      This.
      What we have here in Australia is a global problem because the banks took control and turned us into a bank.

  4. Perhaps if some of the younger generation had a bit more confidence and openly objected against high migration rather than being so scared of saying something ‘controversial’ they might get more affordable housing?

    But that would take courage.

    • This is not a fair criticism. Millennials came up with the alt-right, and are the driving force behind the resurgence of global populism.

      Sure – state media prefers to ignore us and call us racist, sexist, climatist – whatever. But consider how the world is completely different from 2016? The great progressive dream of a 1000 year reign of PC nonsense has ended.

      Does not matter what happens to Trump/Johnson/Modi/Abe – the world is no longer the same, the old rules no longer apply.

      I can assure you, if it was left to BB and Gen X/Y/whtevs – Brexit would never have happened, and Hillary would probably be leading us all into WW3 against Russia.

    • Trout à la Crème

      Openly object where? Where can young people openly object that would result in more affordable housing? And it’s not like there aren’t a sizeable share of oldies attempting to shut down that discussion.

    • Jumping jack flash

      Perhaps if the younger generation (80’s onwards) had been properly educated about the perils of debt and to be wary of bankers we wouldn’t have this problem.

      Fortunately my elderly parents grew up during WW2 – on the “other” side.

      The result of massive amounts of debt, and banks taking control over everything. Being a bank only works when you’re actually a bank. It doesn’t work for anyone else. It doesn’t work for an individual, a factory, a country or a global economy. Those things can’t be banks, at least not for any considerable length of time.

  5. All caused by ZIRP, encouraging asset inflation instead of productive investment. Immigration is simply to ‘grow’ the economy as the other gov lever is broken.

  6. Jumping jack flash

    The saturation of the entire globe with stinking debt will do that to a global economy. What we experience now is simply the symptoms and the desperate attempts to keep it going a little longer.