Rising house prises and the freedom of youth is driving a preference for spending money on travel rather than saving for a home, but experts say the great Australian dream is far from dead.
Research by travel insurance provider InsureandGo reveals 71 per cent of Australians under 30 would rather travel than buy a house in the next 12 months.
Meanwhile, 65 per cent of people aged 31-50 would make the same choice. This figure falls further to 51 per cent for Australians aged over 50.
SQM Research managing director Louis Christopher said the results weren’t surprising, given younger people had always been more focused on travel until it was time to settle down and start a family.
But Australians are taking longer to settle down, with Australian Bureau of Statistics data finding the average age of mothers and fathers has steadily increased since the mid-1970s.
The 2021 census also found home ownership rates for Australians aged 25-29 and 30-34 had fallen by 14 per cent for each group since 1971.
Christopher said younger Australians felt “cornered” in an increasingly unaffordable housing market.
“They know it’s expensive to rent. They know it’s expensive to buy. What do they do? Well, they want to escape of course; they want to take a holiday and get the hell out of here,” he said.
“Obviously, we have a shortage of real estate in this country right now, so we’re not expecting any major correction in housing prices this year … so younger people shouldn’t hold on the sidelines thinking there’s going to be a property crash and then they’ll be able to get in cheaply.
“I think that’s very unlikely to happen. But in the meantime, I’m with them all the way. Take a trip, because you’re only young once and it’s a fantastic time to travel, especially before families come along.”
Rising cost of housing
The great Australian dream of owning a property might be harder to achieve with current high prices and cost-of-living pressures, but Christopher said it wasn’t dead.
CoreLogic found in January, the national median dwelling value rose slightly to $759,437, and rents also rose further.
CoreLogic research director Tim Lawless said affordability was a pressing issue, especially with younger Australians, who were likely to be paid less.
“For the median household across the Australian marketplace, it takes about 10 years to save a 20 per cent deposit,” he said.
“That’s when you can save 15 per cent of your income every year, which of course over the past couple of years has been a lot harder, given the cost-of-living pressures.
“If you’re a younger person, you’re probably below the median household income and … it’s probably going to take you longer … It does make sense to me that a lot of younger groups are … getting disheartened by the barriers to entry in the housing sector given these affordability challenges.”
Update to the Australian dream
Housing affordability is unlikely to significantly improve in the immediate future as there is a housing supply shortage across the country.
Lawless said home ownership was still on the cards if people were willing to scrimp and save, although the image of the ideal home conjured by the Australian dream might look different.
Instead of a detached house on a block of land, an increasing number of Australians might have to settle for apartments or townhouses.
CoreLogic found the gap between house values and unit values widened to 45.2 per cent in January.
Across the combined capitals, detached housing values rose by half a per cent, adding the equivalent of about $4800 to the median house value. Units increased a smaller 0.1 per cent, equivalent to a $900 price lift.
“I wouldn’t be surprised if we do see more and more first-home buyers or younger folk looking towards the medium- to high-density sector,” Lawless said.
“Not because they want to live in a unit, but mostly because that’s where their budget will take them, and [then] potentially upgrading [to bigger homes] through their lifecycle.”
Christoper said despite the tough financial outlook for the years ahead, Australians looking to get into the property market shouldn’t give up hope.
“It has been the issue for multiple generations where it feels, at the time, almost impossible,” he said.
“I remember in my late 20s thinking ‘God, I’m not going to be able to afford a home’. Well, eventually I did.
“It does come around to patience, savings and, ultimately, if one really wants something, one will work hard towards it and it will be achieved. So people should not give up.”