The head of a Sydney real estate network has labelled Generation Y “uncompromising” and “materialistic”, saying they are at fault for cutting themselves out of home ownership.
At a time when housing affordability and home ownership – in particular the comparison between Generation Y and their Baby Boomer parents – is dominating headlines, Malcolm Gunning, principal of Gunning Real Estate said Gen Y are missing out because they aren't prepared to make sacrifices.
“There are lots of young people who are complaining that it is too hard to buy in Sydney, however they won't forgo their material possessions,” Gunning said.
“More and more we are seeing a victim mentality associated with the high cost of property, yet this 'generation selfish' sees wide screen TVs, designer clothes, international holidays and eating out as every day essentials. They simply won't do what is necessary to cut their lifestyle in order to save a deposit.
“They also aren't prepared to invest in a stepping stone property, in a less desirable location, they want the Surry Hills pad, right now and won't modify their expectations.”
But findings from the Household, Income and Labour Dynamics in Australia Report (HILDA) tell a different story. The comprehensive 13-year survey showed that entry-level properties are more expensive than ever. The HILDA report reignited this battle of the generations when it revealed this, suggesting that the chances for young Australians to own their own home are falling.
According to the report, the 10th percentile of homes – or the cheapest in the market – grew 108% in value between 2001 and 2014, compared to a 47% growth for 90th percentile properties at the top of the market.
On top of this, household incomes are dropping. While mean disposable household income had grown by $21,434 between 2001 and 2014, the report showed the median household income fell slightly between 2009 and 2014.
The HILDA report also found that people aged over 65 are the wealthiest and that the 45-to-54-year-old age group holds the largest share of investment properties. A surge in demand for investment properties has commonly been blamed for driving up house prices and undermining financial stability – so much so that the banking regulator, APRA, enforced an annual limit of 10% on this type of lending in December 2014.
But according to Gunning, members of Generation Y residing in Sydney have themselves to blame the most.
“While we must recognise that government incentives have been reduced to new properties and the issue of bracket creep is an important one, Sydneysiders are those who have the biggest problem,” he said.
“Young people in regional areas, who are not bringing home as big a pay packet, are making sacrifices to get into the property market. They recognise that getting onto the property ladder should be a priority and do everything they can to ensure they are saving to get to their end goal.”
However, it is worth noting that house prices have risen the most substantially in Sydney. House price data from CoreLogic shows home values in Sydney have been rising for four years, and have increased by a cumulative 59% over this growth cycle. In Melbourne, the second biggest capital city for capital growth, prices have moved 41% higher over the growth cycle to date.