In a quiet side street in the northern Melbourne suburb of Preston a freshly-placed “leased” sign stands out the front of a small three-bedroom dwelling. For many Australians such signs evoke mixed feelings – the enjoyment of a new home, tempered by unease about being a tenant and doubts about the prospect of affording to buy.
But such anxieties do not register for that home’s new tenant, Cameron De Man, a 21-year-old politics student who, like many other young Australians, doesn’t feel home ownership is the number one priority in his life. For him, it is an unlikely prospect in the near future. “I don’t see myself being able to buy a home before 30 if I’m renting,” he says.
His situation is not unusual. The rate of home purchase by Australians aged 25-44 has declined by 15 per cent in the past 20 years, according to a 2016 study by Australians for Affordable Housing.
But for young Australians such as De Man, this shift of priorities isn’t an entirely negative prospect. “It’s a value judgement … a change of culture,” he says.
Victorian regional executive director of the Housing Industry Association, Gil King, says: “In 20 years-time, home ownership might be something of the past for young people, who will end up renting forever.
“It may be the Aussie Dream as we know it today may be dead, the new dream might be to get a nice apartment at an affordable rental rate, it’ll be a different dream, but it’s still a dream.”
By 2011 21.4 percent of properties purchased by adults aged 25-34 were apartments, compared with just 6.6 per cent in 1991, according to a 2011 Australian Housing and Urban Research Institute (AHURI) study.
And between 2015 and 2019 42,220 apartments will be built in Melbourne alone, BIS Shrapnel data shows.
“It’s more likely today that your first home will be an apartment, it’s a fundamental issue in the thinking of Australians,” said King.
Across Australia, there are an estimated 2.6 million rental households with 6.5 million residents, according to a 2016 IBIS World study.
Yet while renter De Man understands that “if you want to live near the city there isn’t much space,” he still sees himself living in a house.
Labor’s proposed answer to young Australians being locked out of the housing market has been to reduce tax incentives on negative gearing, to discourage investors from dominating the market. By lowering the capital gains tax from 50 percent to 25 percent, it aims to open-up the market to first home buyers.
King is doubtful these changes will achieve this effect: “There’s no evidence that it will open up the market and reduce house prices,” he says.
Tom Dalton, 23, has a more traditional view of the property market, having been paying off a mortgage for just over a year in the south-east Melbourne suburb of Cheltenham. For him, the sacrifices needed to become a home owner were worthwhile in an increasingly intimidating market.
Across all states median home prices rose 22.3 per cent between 2011 and 2015, according to a 2016 HIA study.
“I guess there was a sense of urgency to enter the market, the way I saw it was the earlier I could get in the better it would be for my future. Making a sacrifice now and at a younger age will hopefully benefit myself greatly in the long term,” Dalton says. “A lot of young people I surround myself with are already imbedded in financial debt. Without the support from my parents saving enough money for a deposit wouldn’t have been plausible.”
The need for parents to assist their children in acquiring their first home has been a contentious topic since Prime Minister Malcolm Turnbull appeared on ABC’s talk-back radio show hosted by John Faine in May 2016.
“You should shell out for them, you should support them, a wealthy man like you,” said Mr Turnbull in response to Mr Faine questioning the Coalition’s stance on housing affordability for young Australians.