Home Ownership – A Dream Come True?

When my parents met, Australia ran on pounds, shillings and pence. They bought their quarter acre block in Bulleen for ￡1,000. They chose Bulleen as it was nicer than Heidelberg. Fewer commission flats and all that. They built a 3-bedroom house and had 4 children. After a few years they added an extra bedroom and 2 more kids. This was our family home for over 40 years. When dad died, the sale of the home funded a downsized place and mum's retirement. When she moved into full-time care, the sale of the downsizer funded her place in a nicer than average nursing home.

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My parents lived the great Australian dream, with a firm belief that home ownership would give them a better life. As a child in the heady days of 18% interest rates, I remember the house being the family’s anchor. The thing my parents held on to. The thing that held us all together.

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In his October budget address, Federal Treasurer Jim Chalmers stated, “The great Australian dream of home ownership seems completely out of reach... our country can do better than that”.

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While pundits may dismiss younger adults as the smashed avocado generation, the fact remains that home ownership has never been harder. 65 per cent of Australians think owning a home isn’t really an option for most young Australians anymore (Australia Now).

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The population of Australia has more than doubled since my parents bought in Bulleen. Land in major cities has become a precious commodity, with the median block size now just 393sqm and my parents’ quarter acre block in Bulleen valued at well over the million dollar mark.

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With these property prices, the size of the deposit alone has long kept many out of the market. And now escalating repayments are putting the prospect of homeownership far out of reach, giving buyers cause to ask if they are better off renting. Either way, housing costs are eating into the budgets for all those other essentials — food, healthcare and education — with discretionary spending becoming an unaffordable luxury.

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We can see the implications everywhere. The Great Resignation — the phenomenon by which disillusioned workers saw the pandemic as an opportunity to quit their jobs and do something else —has all but petered out, as people struggle with the rising cost of living. The size of the average Australian family continues to shrink, with cost pressures, focus on careers, travel and growing concerns about world issues driving fertility rates down to 1.5 in 2022. Mum and Dad’s enthusiastic contribution to the gene pool would raise a lot more eyebrows today than it did back in 1980. But when it comes to average household size, in steady decline for the last 100 years, the future trend has become harder to predict as the growth of multigenerational households (thanks to a heady cocktail of immigrant cultural practices, high childcare costs, dual careers and, yes, property prices), the growth in single parenting, single person living?and Government encouragement for ‘ageing in place’ all add complexity to our household landscape. With 69 per cent of retirees preferring a detached dwelling with 3 bedrooms (Australian Institute of Health and Welfare, 2022), what once were family homes that came to market every few years are often held by a mortgage-free single occupant with no intention to sell.

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So where does this leave the great Australian dream?

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McCrindle Research recently found that living the Australian dream means achieving financial freedom and independence (52%), as well as spending quality time with loved ones and friends (44%). The dream of financial freedom and independence, as well as increased free time, is closely linked to home ownership and it’s coming at a much higher cost – now more than half of the average household expenditure (52%).

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While states like Western Australia and South Australia have government schemes to help first-home buyers get into the market with accessible loans, in many places first-home buyers are on their own. And while government incentives will help long term, for today's young professionals paying up to 50% of their income in rent, the help is coming too late.

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The fact is, over time, property has always been a sound investment. But todays 30-year-old isn’t thinking 20 years into the future. They are thinking about the bills in front of them and the fact their landlord just put the rent up. Or burning out working on the side hustle to make ends meet.

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So has my parents’ dream become this generation’s mirage?

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Not if the property industry responds to these political, economic and social factors with imaginative solutions that meet the demands of prospective homeowners who are prepared to make some trade-offs in space, location and lifestyle to achieve a home of their own. A property market that puts a new lens on what property development looks like will thrive. The rise of the 10 minute community, rent-to-own solutions, residents clubs and shared spaces, or apartments like Capital Grand South Yarra with shared cars for residents are all showing the innovation that will help keep the dream alive.