The Australian Housing Crisis: Misled Millennials

A distinguished white picket fence lines the quarter acre property. Behind it, a single story fibro home stands tall in Queensland’s southeast. A Hills Hoist is proudly centered in the sizeable backyard and the year is 1976.

Owning a home of this description is what the Australian dream looked like forty years ago. Fast-forward to 2017 and Aussies are facing a housing market full of challenge. But not even the experts can agree on whether young people are adapting to secure homeownership, whether the financial journey is now a priority or why owning your own piece of Australia is as important as jet setting to Europe and experiencing your first Contiki tour.

It seems Gen Y are confused. More confused then when they heard of the avocado on toast scandal after multimillionaire Tim Gurner declared Millennials who eat the pear shaped fruit should be keeping a closer eye on their wallets. But, eating smashed avo on a slice of bread does not break the bank. Meanwhile, housing experts are also confused and disagree on how to break the crisis cycle and climb the property ladder.

It begs the question; is Gen Y being misled?

Homeownership has long been ingrained in Australian society, as Australians were the first to recognise the importance of owning their own homes, says Housing Professor Terry Burke from Swinburne University in Melbourne. He says Australia was a homeownership society before any other country dating back to the nineteenth century. No other country attained a homeownership majority until the mid twentieth century. Professor Burke says, “it’s very much part of the Australian values system”.

Social researcher and director of the strategy and communications agency, Hello Clarity, Claire Madden agrees. “I think it’s deep in the Australian psyche and high on the aspirational list for Australians to reach that life marker of owning property,” says Ms Madden.

This is echoed in the research she conducted with the Commonwealth Bank. The Connected Future Report asked Australians about their optimism surrounding the property dream. The results showed for almost half of the respondents the dream is still alive, for others it is being redefined. This means Gen Y are overcoming housing challenges by living with their parent’s longer and undertaking formal education as to earn more in their career building years. In her research into housing optimism, Ms Madden also found the average age of a first homebuyer has remained relatively consistent over the last twenty years, hovering at 32 years of age.

Professor Burke instead warns owning property is slipping down the list of Gen Y’s priorities. “I think it (the Australian property dream) is starting to break down particularly amongst young people where they see it literally is a dream,” he says.

Statistics from Live The Dream, a report commissioned by the Financial Planning Association of Australia, revealed homeownership is no longer at the number one spot and has slipped to a distant fourth place in the dream stakes.

Principal Mark McCrindle at McCrindle, a social and marketing research firm in Sydney, was involved in the priorities research. He says financial freedom is now more important. “The great Australian dream once meant home ownership, and the security which came from this, but these once dominant goals have been replaced with lifestyle and financial freedom aspirations,” says Mr McCrindle.

So, which is it? Are young Australians still aspiring to secure their own home or are they more concerned with living in the moment? This is just one example of an inconsistency between the experts and their research statistics. It is just one aspect of the housing crisis which is confusing Australian Millennials.

Looking back at previous generations and discovering how Australia fell into the current crisis is important. But, should the Australian government be looking to ease the pressure on Gen Y or are Millennials adapting to the market?

Mr McCrindle says policies such as foreign investment, self-managed super funds and migration are pushing up house prices. He says the government should step in. “If policy has created this situation then policy should help alleviate it,” says Mr McCrindle.

Gary Millburn, a financial coach at Wealth Enhancers in Sydney, a holistic financial advisory service for Gen Y, says, “if people really want that home ownership then they’re willing to make a few sacrifices in order to get there”.

While Professor Burke believes the current Australian policies don’t work very well for homeowners or ordinary households and should accommodate renters. “What government policy now needs to do is actually rethink the role of the private rental sector and make that more liveable,” says Professor Burke.

While there may competing opinions and misleading ideas about the looming housing crisis, it seems Gen Y are adapting to the changing market conditions. The redefined property dream discussed in the Connected Future Report shows how young Aussies are opting away from what was once tradition. “The factors and the journey to get to that point of 32 (years of age) and what’s gone on definitely looks different to what it did in previous generations,” says Ms Madden.

There is still a place for the white picket fence and the Hills Hoist. But today the property market looks like apartments, town houses and living with Mum and Dad while saving for a version of the Australian dream.

Sources

Claire Madden. Social Researcher. Phone interview. August 17, 2017.

Commbank ATM Survey. 2017. “Connected Future Report.” Accessed August 29, 2017.https://www.commbank.com.au/content/dam/caas/newsroom/docs/170613_CommBank%20Connected%20Future%20Report%20-%20FINAL.pdf

Financial Planning Association. 2017. “FPA ‘Live the Dream’ 2017 National Research Report.” Accessed August 29, 2017. http://www.moneyandlife.com.au/wp-content/uploads/2017/08/FPA-Live-the-Dream-2017-Research-Report-FINAL.pdf

Garry Millburn. Financial Coach. Phone Interview. August 22, 2017.

Mark McCrincdle. Principal at McCrindle. Phone interview. August 18, 2017.

Terry Burke. Housing Professor. Phone interview. August 24, 2017.

#ashleighdwan #journalism #beyondthestory #housing