Paulette in the West Australian, fewer millennials achieving Great Aussie Dream?

by Raquel de Brito The West Australian

Thirty years of number crunching has at last laid bare the truth in the great generational housing debate — millennials have every right to whinge about doing it tougher than baby boomers.

A new Australian Bureau of Statistics report comparing like-for-like time datasets has revealed fewer millennials are achieving the Great Aussie Dream of buying a home compared to previous generations at the same age and those that get a foothold in the market are far less likely to own their home outright.

Their homes are also twice as likely to be an apartment or flat than the purchases made by boomers at the same age.

The verdicts come from an analysis of census data from 1991, 2006 and 2021 — chosen when each generational cohort was aged between 25 and 39 and facing key life transitions including entering the housing market.

But the ABS report also revealed that Generation X, squeezed in the middle, actually paid the highest proportion of their income on mortgage payments and rents compared to the other generations.

That is because interest rates were significantly lower for boomers and Millennials in 2006 and 1991 which were the report’s benchmarks.

Its analysis predates the Reserve Bank’s steep series of official rate rises — the latest a 0.25 per cent increase on Tuesday -- which have now added more than $1100 to average home loans since May.

The report showed that while 66 per cent of boomers and 62 per cent of gen X were homebuyers at age 25-39, the number of millennials, grappling with soaring home prices pushed up by low rates and high demand, was only 55 per cent.

Moreover, young boomers in 1991 were three times more likely than millennials in 2021 to own their home outright — 19.4 per cent to just 5.7 per cent. The figure for Gen X was 8.4 per cent.

Household sizes were smaller on average for those millennials who could afford a home, but their dwellings were more likely to have more bedrooms and they were also more likely to have two or more motor vehicles than gen Xers and boomers.

The plight facing millennial homebuyers as interest rates climb and borrowing capacity dwindles is all too real for Perth researcher Jeremy Bourhill, 33.

He was working in France until COVID-19 hit and after returning to Perth, decided to buy a home with his partner — unfortunately property prices were skyrocketing at the time and they had multiple offers declined.

“We went to heaps of home opens, would put in offers on houses above the asking price and get told that the owners aren’t even going to entertain that offer,” he said.

“We sort of put that on the backburner because it just became exhausting constantly having to look for houses every weekend, it takes a lot out of you.

Even if property prices were to come down, Mr Bourhill said it wouldn’t improve his situation much because interest rates significantly reduced his borrowing capacity.

“We’re expecting a baby, so my partner is going to be on maternity leave, so our borrowing capacity is reduced even further,” he said.

“The crazy thing is that the reason the bank won’t let us borrow a certain amount of money is because the repayments are going to be too large a percentage of my fortnightly income but then that’s what I’m expected to pay on rent,” he added.

Mr Bourhill said it was inaccurate for older generations to think millennials simply had unrealistic expectations.

“The stats will show that the median income to median house price ratio is way, way out of whack compared to what it was in previous generations so I think anyone who says that we’re just complaining and that everyone had it tough when they were our age, I think that can be proven to be wrong,” he said.

The Contessi Group director Paulette Contessi agreed, saying it was a major factor preventing millennials from owning their own home.

“Saving for a 20 per cent deposit with the ever-increasing cost of a home is taking dual income couples up to eight years,” she said.

Ms Contessi said another huge consideration was the daily life of a millennial being eons away from the simpler life of a baby boomer.