Housing affordability remains a central concern in Australia, and it means that millennials are staying home for longer.
That’s one of the findings from CoreLogic’s “Perception of Housing Affordability Survey” conducted by Galaxy Research, and beneath the headline data there’s some interesting insight into how Australians feel about property.
Almost 9 out of 10 non-property owners are concerned about being able to afford their first home, and 58% of people think it will be even harder next year.
Ahead of the federal budget tomorrow, CoreLogic’s report highlights the struggles Australians face from expensive housing, and said a fix to the problem would take co-operation from all forms of government.
“That struggle is being fought hardest across the generations, across different family types, across different wage brackets – and even across states – with older and richer sections of society becoming the property ‘haves’ while others risk being branded ‘least likely’ unless governments at all levels come together to radically rethink ways to address supply and demand,” the report said.
Notably, a majority of Australians still living at home (62%) said they couldn’t afford to move out. This chart shows the breakdown of Australians 18 years or older still living at home:
Among Australians still living with their parents, more than one fifth (21%) weren’t expecting to move out until after they turn 30. 45% of millennials surveyed were aiming to move out between the ages of 25-29.
According to CoreLogic CEO Lisa Claes, such a change in dynamics could give rise to “Cubby House Syndrome”, where families will have to become resourceful to set up semi-independent living arrangements for their adult children.
Surprisingly, those living at home on higher wages had a similar view of housing affordability to those on low incomes. 65% of those on less than $40,000 per annum thought it was too expensive to move out, but 63% of respondents earning more than $130,000 per annum shared the same view.
CoreLogic’s report said that 53% of Australians aged 18-64 owned a home, while 37% had never owned a home but that number rose to 60% for millennials aged 18-34.
The survey showed that home ownership remains the number one goal for most Australians who weren’t in the property market.
“Across the states, the importance of buying a home to those who are currently renting or living with parents is overwhelming,” CoreLogic said.
More than 90% of those surveyed in NSW and Queensland said that being able to buy their own home was very important. That figure was lower in Victoria and WA, where around 50% said it was very important.
Perhaps tying into the impact of housing affordability, those same respondents are equally concerned about getting a foot in the door. Almost three quarters of those surveyed were either very concerned (50%) or quite concerned (24%) about being able to afford a home.
The chief reasons for that concern probably don’t come as much as surprise – the minimum requirement for a deposit these days, and the impact of stamp duty:
Millennials were most likely to cite having a deposit (49%) as their biggest impediment to market entry. That differed from Baby Boomers, who were opposed to stamp duty (49%) and the entrance of foreign buyers in the market place (48%).
Across respondents of all income levels, removing and reducing stamp duty was said to be the best strategy for making housing more affordable.
Looking across the states and territories, the ACT reported the highest level of home ownership while Queensland was the lowest:
There was a slight bias towards the view in NSW and Victoria that property in those markets has reached its peak, with around 30% of respondents in those states saying that now is a good time to sell.
That being said, the lack of liquidity in Australia’s property market means it’s not just buyers feeling the pain.
The report cited an LJ Hooker survey of 2,700 households who’d had their properties appraised for sale. It found 60% of respondents didn’t proceed with selling their property.
More than one third of those surveyed said that a lack of choice on the market was the main roadblock to selling up, while 26% said they didn’t go ahead due to the excessive cost of stamp duty for buying their next property.
CoreLogic’s international comparison repeats the common assertion that Australia remains one of the most expensive destinations for housing in the world.
CoreLogic sighted the annual Demographia International Housing Affordability Survey, which places Sydney as the second most expensive city in the world and has 5 Australian cities in the top 20. Here’s the top 10 list:
Claes highlighted the sheer scale of Australia’s housing market, noting that the total value of $7 trillion far exceeded both the superannuation industry ($2.2 trillion) and the Australia share market ($1.8 trillion).
“Australian households have more than half their wealth tied up in the residential housing sector and about 70% of their debt is housing related,” she said.
Corelogic’s survey was based on interviews of 2,010 Australians aged between 18-64, with the following distribution across states: