Housing affordability has become a huge issue in Australia. Prices have soared, especially during the pandemic, with median price rises across the nation peaking at 21.3% in the 12 months to January 2022, according to CoreLogic.
Despite rising interest rates and prices now trending down in the two biggest markets of Melbourne and Sydney, median prices still rose 11.7% over the combined capitals in the year to May 2022, meaning a property is still beyond the reach of many.
Since the early 1990s, median housing prices have increased from four times median incomes to more than eight times today (10 times in Sydney), Grattan Institute figures show.
It now takes 12 years on average to save a 20% deposit for a typical dwelling, up from seven in the early 1990s. So, it’s hardly surprising that home ownership rates are falling fast, especially among the young and the poor.
Between 1981 and 2016, home ownership rates among 25- to 34-year-olds fell from more than 60% to 45%, and among the poorest 40% of that age group it has more than halved, from 57% to 28%.
Home ownership is also falling among poorer older Australians. Among the poorest 40% of 45- to 54-year-olds, just 55% own their homes today, down from 71% four decades ago.
Undoubtedly the “bank of mum and dad” has helped many young people clear the deposit hurdle to get their first home, but not all parents have the means to do this. The Grattan Institute, a public policy thinktank, has proposed shared equity schemes as a way of levelling the playing field.
Shared equity schemes – where another party pays for and owns part of your home – are not common in Australia, although some state governments do run modest programs.
This story is from the August 2022 edition of Money Magazine Australia.
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This story is from the August 2022 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
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