Despite house prices and rents rising ahead of incomes, young Australians hold onto a “blind optimism” for home ownership, finds new research from AHURI.
Young Australians want a home to call their own but work and study come first, finds a new report from the Australian Housing and Urban Research Institute.
The research, Young Australians and the housing aspirations gap, was undertaken for AHURI by researchers from Swinburne University and Curtin University.
In 2015-16, only 17 per cent of young adults aged 18-24 years lived independently, with two thirds still living with their parents. Around a third of Australians aged 25-34 either remained or moved back with parents or lived in shared housing.
“As house prices and rents have risen ahead of incomes, it is taking longer for young adults to create their own independent and secure households, and for some it is not attainable in the foreseeable future,” says the report’s lead author, Dr Sharon Parkinson of Swinburne University.
The ideal of home ownership is not as persistent as for past generations, varying with age, education and quality of current living arrangement. Sixty per cent of Australians aged 18-24 years and 70 per cent of those aged 25-34 years identified owning and living in their own home as their ideal tenure. This compares to 80 per cent of older Australians.
For emerging adults (18-24 years) sharing a house with a group typically met their short-term (82%) but not longer-term (25%) aspirations. Living with parents mostly met short-term (76%) but not longer-term (30%) aspirations.
For early adults (25-34 years) the housing aspirations gap is greatest for individuals in the private rental sector, and moving house was the “one constant in their lives,” AHURI says. Short-term aspirations for this group were shaped around ‘horizontal’ moves – or finding an arrangement slightly better than the previous move.
Despite rising housing costs, most 18-24 year olds thought homeownership would be possible in the near future.
“We found that many emerging adults had a ‘blind optimism’ that they would be able to achieve their housing aspirations despite not actively planning for their housing future,” says Dr Parkinson.
“Nearly a third of those we surveyed felt that they would be purchasing a home within the next five years with a further 36 per cent believing they would buy in five to 10 years.”
By early adulthood there is a sharp divide in optimism influenced by education and income levels. Nearly two-thirds (61%) with a tertiary education and a higher income believe they would buy a property within five years, compared to just over a third (36%) for those with an education to year 12 or below, and less than a quarter (23%) for those with an education to year 11 or below.