First-home buyers will struggle to get into the market without help from family already in the market, experts warn
Soaring house prices are heading to a point where the only way young people will be able to get into the market is with financial help from their family, experts say.
The fast pace of property price rises mean home ownership could soon be out of reach for people who do not already own real estate. Melbourne home values jumped 5.5 per cent in three months on CoreLogic figures released this week, with Sydney up 9.3 per cent and all capital cities rising.
The idea of the first-time buyer was now “slipping into the past”, the University of South Australia’s director of the centre of housing, urban and regional planning, Professor Chris Leishman, said.
“One of the things I found really interesting is that younger people are not even thinking about home ownership,” Professor Leishman said. “It’s now become so unrealistic they think there’s no point in even dreaming about owning a house.”
First-home buyers would most probably become long-term renters instead, with Melbourne’s updated rental laws now taking a similar approach to those in Canada and the UK, to ensure stable rental conditions for longer periods of time, he said.
Many potential buyers feel the same way, with 73.2 per cent of those surveyed in a recent poll increasingly feeling they had been locked out of the property market. The survey commissioned by Real Insurance polled 5000 Australians in February and March.
Grattan Institute economic policy program director Brendan Coates agreed first-home buyers would become much rarer in the future, with home ownership in younger people already falling over time.
Australian Bureau of Statistics figures showed that between 1971 and 2016, home ownership in age groups considered first-home buyers — 25-34-year-olds — fell from 57 per cent to 44.6 per cent .
Those aged 35-44, saw ownership rates fall from 71.4 per cent to 62.2 per cent over the same time.
The long-term decline comes despite a bump last year in the number of first-home buyers, buoyed by ultra-low interest rates, government grants, pandemic-era stimulus and cash saved from staying at home in lockdown.
“The current rates of first-home buyers have been driven up by low interest rates and stamp duty concessions and Commonwealth government incentives like HomeBuilder,” Mr Coates said. “But they only help people who have a deposit, if you don’t have the deposit you are much less likely to be able to afford a home.”
For people who couldn’t afford to save for a deposit, home ownership would become much less about a person’s own earnings or endeavours, and more about the financial help they could get from family, he said.
That included gifts of money, inheritance of property or being able to secure a parental guarantee over their mortgage. This was widening the gap between the haves and have-nots, Mr Coates said.
To even the playing field and ensure people were not left in poverty or paying rent in their retirement, he believed the government needed to act.
“They can boost home ownership and there are ways they can do that by building more supply, or, they can scale back tax incentives [for investors],” he said.
“But even if we do, we’ve gone too far down the path and the gate has been slammed shut for younger people now.”
Demographer and director of Ethos Urban, Chris McNeill, said rising prices meant first-home buyers were making more compromises when buying a home.
“I think the key thing people are going to find increasingly difficult is to buy their first home in the suburb or area they want,” Mr McNeill said.
Many have been priced out of the suburbs they may aspire to live in such as Thornbury or Brunswick and could only afford to live in the outer suburbs like Werribee or Cranbourne East, he said.
Mr McNeill did not believe first-home buyers will be unable to buy into the future, but said they would have to live farther away from the CBD.
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