It’s no surprise that the number of homeowners under forty is shrinking, however what is quite alarming is that this number has actually shrunk dramatically just four years from just under a third at 31.2 per cent in 2010 to around a quarter at 25.2 per cent in 2014 according to the Household, Income and Labour Dynamics Survey (HILDA) Survey.
This is a sharp contrast to the turn of the century with six people in every 100 between the ages of 18 to 24 owned their own home in 2002, with the figure currently at just 2, a trend which is likely to continue.
This, we know, is a direct result of the housing pricing rising to unsustainable levels for young people to enter the property market. For those who have decided to take the plunge and purchase a home, they have been saddled with debt which has increased over 174 per cent in nominal terms since 2002.
Data indicating that homeownership for young people as drastically decreased is found in this article on Domain, an eye-opening trend which indicates that we are experience a rapidly growing shift in the way we are living under 40. In the article, First Home Buyers Australia co-founder Taj Singh expressed concern the data indicated a social crisis stating that an entire generation was now being locked out of the capital city and the young people would be purchasing a home later in life and likely working hard and longer.
However, another trend which would appear to be rising in correlation with this shift is that of rentvesting. Young people are now deciding to purchase investment properties while continuing to rent in a location they feel is compatible with their lifestyle. The advantages of this strategy are that young people are able to purchase earlier in their life while also building their wealth, a safety net which will last until they reach retirement age. This is in contrast the traditional course of action of purchasing a home and building equity as you pay off the mortgage.
It would appear there is now is more of a focus on lifestyle factors rather than what traditionally constituted as the norm of purchasing the family home out in the suburbs. Younger people are enjoying the conveniences of the city, close proximity to their workplace and entertainment while still looking towards the future by creating sound financial strategies that ensure they are able to have financial security later in life.
As the trend of rising home prices, lower rates of homeownership for young people and investment properties being preferred for first home buyers, we are likely to young people under 40 continue to build their wealth while taking advantage of lower rental prices closer to the city as they are able to take advantage of the lifestyle of being close to the city without sacrificing playing their part in the Australian dream. This is welcome change from the bleak picture often painted for generation Y, often labeled generation rent and instead creating opportunities for this maturing generation to make financial decisions that their parents were never able to take advantage of.