While interest rates are at historic lows and the property market has shown signs of stabilisation, a new report has shed light on the lingering housing concerns shared among younger Australians.
CoreLogic’s 2019 Perceptions of Housing Affordability report revealed that 34% of those surveyed believe they will be at least 30 years of age before leaving home, up dramatically from 20% in 2017.
Additionally, 83% of non-property owning Australians are worried about being able to afford their first or next home, with 48% of those surveyed saying they’d struggle to meet mortgage repayments if interest rates rose two percentage points and 25% saying the same if the rate was hiked just one percentage point.
Despite the lowest mortgage rates since the 1950s, the average home buyer still allocates 35% of their gross annual income to servicing a mortgage, and it takes a typical household nearly nine years to save a 20% deposit.
“Key affordability ratios show it is still difficult for Australians to afford a home and repay a mortgage. The recent gains in affordability could also be quickly lost if the early trend towards higher prices is sustained,” said CoreLogic head of research Tim Lawless.
The report also found that more Australians, particularly young people, are asking family to help them circumnavigate the “ongoing affordability crisis.”
A quarter of millennials said family assistance with their deposit would be a welcome help, with one in five open to family support to pay off the mortgage.
“The ‘bank of mum and dad’ – where young people rely on their parents to support their entry into the housing market, either by helping with a deposit or assisting with loan repayments – is becoming one of the last sources of hope for millennials,” said Lawless.
“Millennials haven’t given up on the great Australian dream – they want to own homes. In fact, by being denied it, they want it even more. But they are losing hope that they will ever be able to realise that dream.”
A significant 86% of millennials consider home ownership important, while 81% of Australians of all ages feel the same.
However, affordability is but one issue barring home ownership, with securing a loan approval now the second-largest barrier for Australians looking to purchase a property. The 39% who felt it was an obstacle preventing them from a loan in 2017 has now risen to 45%.