{"id":187848,"date":"2025-03-24T15:30:43","date_gmt":"2025-03-24T04:30:43","guid":{"rendered":"https:\/\/propertyupdate.com.au\/?p=187848"},"modified":"2025-02-21T09:23:12","modified_gmt":"2025-02-20T22:23:12","slug":"we-know-how-hard-it-is-for-young-people-to-buy-a-home-so-how-are-some-still-doing-it-anyway","status":"publish","type":"post","link":"https:\/\/propertyupdate.com.au\/we-know-how-hard-it-is-for-young-people-to-buy-a-home-so-how-are-some-still-doing-it-anyway\/","title":{"rendered":"We know how hard it is for young people to buy a home \u2013 so how are some still doing it anyway?"},"content":{"rendered":"

For young Australians, breaking into the housing market feels tougher than ever. <\/span><\/p>\n

Many now fear they\u2019ll <\/span>never be able to own a home.<\/span><\/p>\n

\n

Despite public debates on whether it\u2019s truly harder to buy a house than it was decades ago, falling homeownership rates across generations suggest the market has indeed shifted significantly against those just starting out.<\/p>\n

But if it\u2019s so difficult, how are some young people still managing to buy homes?<\/p>\n

Our newly published study set out to investigate the major barriers \u2013 and the factors \u2013 that might tip the scales in favour of ownership.<\/p>\n

Despite the challenges imposed by high home prices relative to incomes, some young Australians are still finding a way onto the property ladder.<\/p>\n

While being a good saver helps, a boost from the \u201cbank of mum and dad\u201d can be a game changer.<\/p>\n

\"Buying<\/p>\n

A fading dream<\/span><\/h2>\n

Using 14 years of data from the 2006-2020 government-funded Household, Income and Labour Dynamics in Australia (HILDA) survey, we tracked independent adults aged 25-44 who were not homeowners.<\/p>\n

Our calculations from the HILDA survey show that for those aged 25-44 , the average house prices across major cities in 2006 were 4.5 times the average household income.<\/p>\n

In Sydney, for example, the average price of properties faced by these young people was about A$600,000 in 2006 while the average household income was $102,000.<\/p>\n

Across major cities, this ratio rose steadily to 6 times income in 2018, before dropping slightly to 5.4 times income at the start of the pandemic.<\/p>\n

For young people in cities, house prices are spiralling upward at faster rates than their incomes.<\/p>\n

\"Mean<\/p>\n

A generous \u2018bank\u2019 available to some<\/span><\/h2>\n

As property markets have become more unaffordable, the share of non-homeowning young people receiving help from the \u201cbank of mum and dad\u201d has climbed.<\/p>\n

We estimated from the HILDA survey that in 2006, 3.1% of this group received more than $5,000 in transfers or inheritance from their parents, rising to 5.3% by 2020.<\/p>\n

Young people are good savers<\/span><\/h2>\n

Contrary to popular some commentary that young people are unable to purchase a house because they are spending their money on \u201csmashed avocados\u201d, young people are actually saving more.<\/p>\n

In 2006, around two-thirds of non-homeowning adults aged 25-44 saved regularly by putting money aside each month, saved non-regular income, or saved money left over after they met their spending needs.<\/p>\n

This proportion increased to four in five of young non-homeowning adults in 2020.<\/p>\n

\"Percentage<\/p>\n

In general, young non-homeowners are also planning further ahead financially. In 2006, 47% were planning more than a year ahead. By 2020, this share had risen to 55%.<\/p>\n

\"Percentage<\/p>\n

How are some young people buying houses?<\/span><\/h2>\n

We looked at how the personal saving habits of young people influence their homeownership chances, taking each person\u2019s finances and living situation into account.<\/p>\n

Not surprisingly, saving regularly does improve the likelihood of eventually buying a house.<\/p>\n

However, being a regular saver is much less likely to offset the impact of rising prices than parental help.<\/p>\n

Our research found that once prices exceed three times an individual\u2019s income, their odds of becoming a homeowner are halved.<\/p>\n

<\/figcaption><\/figure>\n

In much of Australia, prices are already well above that mark. In all state capitals, they\u2019ve gone beyond six times annual household income \u2013 a line where the odds of homeownership fall to about a third.<\/p>\n

However, we found having access to the \u201cbank of mum and dad\u201d can shift these odds dramatically.<\/p>\n

We found receiving financial assistance of more than $5,000 quadruples the odds of becoming a homeowner.<\/p>\n

Parents also help in indirect ways.<\/p>\n

Young people living in rent-free dwellings provided by family or friends had more than double the odds of private renters.<\/p>\n

This puts those from well-off families at a distinct advantage.<\/p>\n

Those without parental assistance face steeper deposit hurdles and risk missing out on access to areas with better job prospects.<\/p>\n