The ongoing affordability crisis is entrenching a generation dependent on parents for housing, with the number of Millennials giving up hope of moving out of home by 30 years of age surging, according to CoreLogic’s Perceptions of Housing Affordability report for 2019.
The report identified the proportion of Australians who think they will be at least 30 years of age before leaving home has rocketed from 20 per cent in 2017 to 34 per cent in 2019.
Lisa Claes, CEO CoreLogic International said the report proves that the ‘cubby house’ syndrome – where children are prolonging their home stay with parents – is intensifying.
“Our youngest generation is effectively being locked out of the market and increasingly dependent on parents,” Ms Claes said.
“If Millennials’ affordability disillusionment continues, we risk entrenching a generation who become disenfranchised from society. It raises serious issues around inter-generational equity and should be a catalyst for policy makers to address affordability at a foundational level.”
Drawing upon the ‘bank of Mum and Dad’
The report found that amid the ongoing affordability crisis, more Australians, particularly young people, are turning to family for help.
A quarter of Millennials say family assistance to raise a deposit would be a great help when buying their first home. That’s a significant increase on the 21 per cent in 2017.
One in five Millennials also viewed financial support from their family to pay off the mortgage favourably (up from 13 per cent in 2017).
Tim Lawless who leads Research at CoreLogic research noted the ‘bank of Mum and Dad’ – where young people rely on their parents to support their entry into the housing market, either by helping with a deposit or assisting with loan repayments – is becoming one of the last sources of hope for Millennials.
Despite the challenges Millennials face, the great Australian dream of home ownership burns brightly. The vast majority of Millennials (86 per cent) rate home ownership as important, making them the most passionate of all demographics.
And they are in good company. Overall, 81 per cent – four out of five – Australians believe it is still important to own a home.
“Millennials haven’t given up on the great Australian dream – they want to own homes. In fact, by being denied it, they want it even more,” Mr Lawless said.
“But they are losing hope that they will ever be able to realise that dream.”
Affordability challenges ease but remain critical
The research did however reveal that housing price falls have slightly eased affordability concerns. Over half of all Australians (54 per cent) believe that housing affordability is the same or better than it was a year ago.
However, 83 per cent of Australian non-property owners are still worried about being able to afford their first or next home (compared to 87 per cent in 2017).
“Despite this easing of concerns we can’t be complacent. We still face major affordability challenges,” Mr Lawless said.
“Key affordability ratios show it is still difficult for Australians to afford a home and repay a mortgage. The recent gains in affordability could also be quickly lost if the early trend towards higher prices is sustained.”
Despite the lowest mortgage rates since the 1950s, home buyers are still dedicating an average 35 per cent of their gross annual income to servicing a mortgage (down from 37 per cent in mid-2017) and it takes the typical Australian household around 8.7 years to save a 20 per cent deposit (down from 9.2 years in mid-2017).
Struggling to secure a loan
Australians face a number of obstacles to buying a home. They are struggling to raise a deposit, with 47 per cent saying this.
Almost as many are finding it hard to get loan approval. It is now the second-largest barrier for Australians seeking to buy a home, with 45 per cent saying it was an obstacle.
That represents a significant increase from 39 per cent in 2017 when it was the sixth most important concern.
“The severe tightening of credit availability following stronger prudential regulation and outcomes related to the Royal Banking Commission is hurting Australians, who are struggling to get a loan,” Mr Lawless said.
“Lenders also have a greater focus on evaluating and assessing individual borrower’s expenses.”
Australians united against stamp duty
The report found that across all generations and states, Australians are united in their growing opposition to stamp duty. Some 79 per cent of respondents thought the best strategy to improve housing affordability was to remove stamp duty (up from 73 per cent in 2017).
Baby Boomers led the growing opposition to stamp duty, with 87 per cent saying that reducing or removing stamp duty would improve housing affordability. That represents a stiffening of opposition among the most senior generation, as 80 per cent were opposed to the tax in 2017.
