Here’s why Home Ownership is Falling in Australia
According to the latest study conducted, homeownership is falling in Australia. Compared in the past, Australia is currently seeing a huge decrease in terms of homeownership especially among the young individuals and of course, the less fortunate. The country has always had a problem with housing affordability. The fact remains that there are not a lot of options for those who want to buy a house of their own because it’s too expensive to afford.
Experts have been trying to point out that the housing affordability problem is taking its toll on homeownership rates. Fewer than half of 25-34-year-olds actually own their own home, which was not been the case over two decades ago. From 63% in 1981, the current homeownership rate is at 23% today – that is about a 40% decrease. This should be something to think about because the young people of today will be retirees in the future.
The Retirement Income Review showed results that most homeowners are on track for a pretty comfortable retirement, however, Australians who are currently renting are looking like facing a bleak future ahead. Financial stress is something a lot of Senior Australians who rent in the private market actually go through – much more than homeowners or public housing renters. According to statistics, almost half of all retired renters are considered in poverty and with the decrease in homeownership, the numbers will only increase.
What has been the biggest hurdle among potential homeowners?
The deposit. So many potential homeowners are struggling to save enough for a deposit. During the early 90s, experts are saying that it would take about 6 years to save a 20% deposit. Cut to 2021, it would most likely take about a decade to do so.
Programs such as Home First Super Second can only do so much. Unless your parents can support this investment financially, it would probably be difficult to push through.
What could be the solution?
It is a simple solution really – more homes. However, it is not easy to achieve. To make housing more affordable, the best way is to build more homes.
Grattan Institute Research recently suggested that the best way to allow more individuals to be interested in actually taking the time to save up for a home has everything to do with housing availability and affordability. Relaxing all planning rules to make way for more houses to be built is a good strategy, especially if these houses are built near Australia’s major cities. Unfortunately, some matters are out of the government’s hands such as the planning rules.
The smartest way to make housing more affordable is to increase the supply. It is important that discussions on how this will be done effectively.