With no formal qualifications beyond the HSC, my parents bought their first house at 25 in Melbourne’s now prized inner north. They attest to fifty-hour working weeks in a myriad of low paid positions while forgoing any remnants of a social life at the time, but the market still allowed for them to make it happen.
That three-bedroom weatherboard in Coburg is now worth nine times what they paid for it in the early 90s. Owning a home was part and parcel with adulthood in Australia, like year-round barbecuing or buying a boat and taking it to the Murray.
Growing up overseas I always thought of Australia as a place where rationality and frugality ruled all. People worked hard and had little shame in buying used goods and saving the difference. While much of the developed world watched as over inflated housing markets crashed taking entire economies with them in the late 2000s, Australia seemed unfazed.
By last year’s December quarter the average price of a house in Melbourne had climbed to $777,000, over 10 times the average annual wage. The figure was almost 14% more than it was at the same time the previous year.
Buying a home in 2017 is truly a numbers game. For young people without help from wealthy relatives or as Joe Hockey once put it, the ability to “get a good job that pays good money” the future is scarily uncertain.
While older Australians already have an 85 percent rate of homeownership, the number of first homebuyers has halved in the past 10 years the latest Australian Bureau of Statistics data shows.
In addition to this, 80 per cent of first-home Millennial hopefuls are unable to get on the ladder, a survey from REST Industry Super of 1000 young Australians found. About 40 percent said they had “no idea” how they’d fund their retirement.
This is perhaps when the woes of ‘generation rent’ will become the clearest. According to data from the Association of Superannuation Funds of Australia it is estimated that for someone to afford a comfortable retirement at 65, a single would need $545,000 and a couple would need $645,000
Along with this, the most recent research from the Australian Housing and Urban Research Institute show a surge in the proportion of long-term tenants renting for 10 years or more. A third of all private renters were long-term in 2013, up from 25 per cent two decades ago.
Despite this, things may be on the up. According to a report released last month, the research arm for the world’s richest nations said Australian house prices “have reached unprecedented highs” and that a market crash, or “significant downward correction” would likely cut consumer spending and push up mortgage defaults.
Although this generation may be set to join the cohorts of noughties who watched as economic recession riddled their nations, it means one day I may too be able to buy that weatherboard in Coburg, if I’m lucky.
Catalyst has been the student publication of RMIT University since 1944. We may be older than your parents but we’re still going strong!