Millennial homebuyers are having difficulty finding their place in the property market because of the older generation’s ‘age-in-place’ mantra.
A recent study from the University of South Australia showed that members of the Silent and Baby Boomer generations maintained the lion’s share of housing properties, locking out the Millennial generation.
Over three census periods — 2006, 2011, and 2016 — researchers found that 80% of older generations were long-standing homeowners compared to only about 50% of Millennials.
According to the research, 68% of Baby Boomers can own their home before age 34.
However, only half the Millennials were able purchase their first home simultaneously.
UniSA researcher Dr Braam Lowies said rising house prices, which have grown by around 25% annually in January, contributed to the “massive financial constraints” millennial homebuyers must face.
“In Australia, owning your own home has always been the great Aussie dream. But each year, this dream is becoming further out of reach for younger Australians,” he said.
Limitations in housing options are another reason Millennials stay away from the market. Many of these seniors prefer to live in their own homes rather than living in senior residences.
“Millennials are finding themselves locked out of the market as the Silent Generation and Baby Boomers retain a significant portion of the housing stock, much of which has considerable value and development potential due to its lot size and location,” Dr Lowies said.
“The consequence is that younger people are frequently compelled to revert to the parental home or the rental market – and this is despite government grants to support first home buyers.”
Consider these things before you make a purchase
NAB released recent research about the top considerations of Australians when buying a house.
Andy Kerr, NAB executive for homeownership, stated that recent price rises have had an impact on affordability.
“The trade-off between affordability and lifestyle has changed markedly throughout the pandemic, with choices around CBD proximity, additional space and price fluctuating over the last two years,” Mr Kerr said.
“Through this competitive housing market, we’ve also seen the confidence provided by fast decisions is critical in reducing stress and supporting customers into their dream home — 80% of our customers are now provided a decision within a day.”
According to the study, the most important determinant of whether a property is purchased or not is the amount of money that buyers are willing to borrow.
This was quite a different situation from the priority in the last years, which was the requirement to study or work in a particular area.
The perception of rural buying changed dramatically last year because COVID’s flexibility in work.
But it appears that attitudes have changed. It is better to buy in a city than in a rural location.
“We know that lockdowns have reshaped how we live with many at home for longer periods,” Mr Kerr said.
“However, what we are now seeing is little green shoots of people returning to inner-city suburbs, looking for the balance of lifestyle and value as cities like Melbourne and Sydney have opened up.”