What happened to the great Australian Dream? – Michael Yardney

Here is an amazing stat – less than half of all Australians could be homeowners by 2017.  That’s next year! That is part of the HILDA Report.
Michael Yardney tells us about the report and some of its findings, as we ask – what’s happened to the great Australian dream of everyone being able to own a home to call their own?


Kevin:  What we know as the Great Australian Dream may not be a reality anymore, well certainly not in the years and decades to come. There’s been a new study that’s been published, and I want to talk to Michael Yardney about it.
Good morning, Michael. Thanks for your time.
Michael:  Hi Kevin.
Kevin:  Michael, this is called the HILDA Report. Tell me about it. How did it come about, and what are some of the findings?
Michael:  Professor Roger Wilkins from the University of Melbourne’s Institute has been following about 17,000 Australians, Kevin, for the last 15 years, and he’s giving us a picture of what’s happening to the nation about households, about their finances, about their employment, about family life and health, and I guess what we’re particularly interested in today is what it means to their wealth, what it means to home ownership, and the gap that’s widening between the older wealthier people and the younger generations who are having some struggles.
Kevin:  The report showed, I think, that there was a decline in the number of owner-occupiers over that period.
Michael:  Over the time, there has been an increasing decline in owner-occupiers, and the report is predicting that by 2017 – and if my sums aren’t wrong, Kevin, that’s next year – there’s going to actually be about a 50% home-ownership rate around Australia. So half of Australians won’t be owning their own home but they’ll be in rental properties, Kevin, and in general, it’s the younger generations.
Kevin:  Already we’re starting to hear people say, “Oh, this just underlines the fact that housing in Australia is becoming unaffordable.” There are two factors here, Michael. One is affordability, certainly, and the other one is the generation. Do they really want to own a property?
Michael:  Kevin, that’s a really good point because the Generation Y’s are very different from when you and I were in that age group. They’re not putting down their roots as soon. They’re not as comfortable taking long-term jobs as soon as we used to. They have traveling aspirations and they’re moving around a lot. Often they’re going to become what we like to call renting investors. They rent where they want to live but can’t afford necessarily to, and then a lot of them are still buying investment properties.
One of the other parts of the study showed how many people are buying investment properties, and that’s increasing. But yes, you’re right, Kevin, the younger generations are not setting their roots into the ground as early in their lives as the older generations did before them.
Kevin:  Yes, and just to underscore that point, Michael, I think there’d be no doubt that we’d have to say if there was an unaffordable state anywhere, it would be New south Wales or Sydney because of the great price growth we’ve seen there. But I notice in the report that it says that decline in home ownership was greatest in Victoria followed by New South Wales. Once again, I just wonder how much of this can be put down to affordability.
Michael:  It’s not purely affordability. Another factor, of course, is the aspirations of younger people and the sort of property they want as their first home. I know when you and I started off, we were happy with a small apartment and you had cardboard boxes for furniture. A lot of younger people are not comfortable unless they have a media room and all the stainless-steel appliances and the things that their parents took 30 or 40 years to achieve.
But they are buying property. They’re getting on the property ladder, recognizing that it is a way of creating wealth and maybe the investment property will lead them later on to have a home, Kevin.
Kevin:  Yes. What about housing grants, first-home owner grants and so on? It would be interesting to look at the number of people who qualified for those as opposed to those over 65 who are maybe going on and getting another investment property as opposed to a first home, Michael.
Michael:  Kevin, what the study showed was that after the GFC, there was a bigger drop in first-home owners, and you’re right; it actually had to do with the dropping of first-home owner grants for established properties and pointing them to new properties. But in general, young people don’t always want to live in the outer suburbs; they want to be where the action is, closer in. And they don’t want to live in those big high-rise monolith blocks. So it’s actually stopped them buying a lot of the properties they want.
Interestingly, the study showed that 70% of first-home owners would prefer to buy an established property, and if they’re not getting a first-home owner grant for that, they’re buying investment properties instead.
Kevin:  That gap between the young and old in terms of wealth, this would be highlighting that, Michael, wouldn’t it?
Michael:  Kevin, the study showed that the wealthiest households were couples over 65, who’ve experienced a real increase in their wealth – almost 70% increase in their wealth – since 2002 when the study started, and it has a lot to do with their higher rate of home ownership, their higher level of superannuation, and the fact that a lot of them also own one or two investment properties. So a lot of Australia’s wealth is in real property, Kevin.
Kevin:  Michael, it comes down to choices, doesn’t it? I think a lot of younger people are making the choice and saying, “This isn’t all that important. Right now, I’d much rather have a better lifestyle, a bit of disposable income, live where I want to live, and maybe do a bit of travel.” And quite frankly, when you look at what happens overseas, there’s nothing really wrong with that.
Michael:  Kevin, 100% right. It’s the value you put on various things, and there’s a lot of sense in the argument that the young people are putting. And overseas, this is the way it works. People are renters all their lives. If you lived in London or New York in Manhattan, you wouldn’t expect to be able to buy a home. In Melbourne and Sydney in particular, international-sized cities, international-valued cities, as well. Our demographics, how we live where we want to live, how we choose to live, is changing. This is being reflected in home ownership rates.
Kevin:  Yes, indeed. Always great talking to you, Michael Yardney. Thank you so much for your time.
Michael:  My pleasure, Kevin.

Leave a Reply