Why Did Home Ownership Fall??????

The key reason for falling ownership rates is more to do with lifestyle than house prices…

While the proportion of 25 to 34 year olds owning the home they lived in had fallen from around 60 per cent to around 50 per cent since the 1970s

Most of the decline happened by the early 1990s, before the big increase in housing prices relative to incomes. What changed during that earlier period was that people started partnering and settling down later in life
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lots of the angst we’re seeing is that people begin settling into communities as renters, and then when it’s time to buy, they’re stuck. They can’t afford the area where they’ve been renting, but they have already put down roots in that community.

And so they feel that home-ownership is out of reach.

In years past, people bought before they started putting down roots. So the decision about where to buy wasn’t so angsty. You hadn’t planted roots yet so you didn’t have such strong preferences about where you ended up. You just bought into areas you could afford.


Look what is happening in USA, similar scenario
Homeownership just dropped to the lowest level since 1965—blame the millennials

 

@MTR - have you been reading articles from over yonder?

 

One thing to remember is house price demand is what we call 'elastic'. When prices go up, demand for houses actually falls, because people share accommodation, don't move out of home, don't marry as soon, don't downsize, don't buy holiday homes and so on. When prices fall, more people buy houses. But you're certainly right that there are many factors - people live at home longer now, get married later - it's a complex thing.

 

US?
I am focusing on markets where millennials are buying into, build what they want.
But home ownership in US also dropped.

 

From what I have seen,

Education. With degrees now the norm, it is not unusual for a person to be into their twenties before starting paid employment other than smaller casual jobs.

Lifestyle. With the comparatively cheap airline prices, overseas travel is now the norm rather than the exception.
Also, people are leaving home at a later age, often closer to 30 than 20 which means the urgency for a place of their own is delayed.

A child of the 1950s, I started work at 16 after year 10. That's what most girls did. Hubby started work at 18 after year 12. That's what most boys did. I bucked the trend by having a NZ working holiday for a year at 18-19. Met hubby when we were both 20, both put or heads down and saved as hard as we could. Engaged and bought a block of land at 21. Married at 22. Built our first home when we were both 24-25. Concentrated on paying down the mortgage.

Most of my friends followed a similar trajectory. Home ownership was drummed into us as the main goal in life by parents who lived through the depression and WW2.

No internet, no mobile phones, no credit cards. You saved up, put it on layby or did without. Hire purchase was considered a slippery slope to destitution.

No mortgage insurance, savings bank (cheapest interest) loans capped the amount you could borrow, and required a 33% deposit (and a serious grovel to the local bank manager!). Even finance companies or bank investment loans required a 20% deposit.

Very different today. So many more choices so for many a home of their own is not a priority.
Marg

 

What???? I need it now!!!!

Can I have a serving of smashed avo and a half shot double ristretto in a mug? Paypass thanks.

 

This...

I didn't finish Uni till 21, then traveled for years....didn't buy my first home till my 30s...

Sometimes I feel regret on not buying something sooner....But then again i had a riot, now speak 3 languages and visited twenty-something countries...

Lots of my friends did the same.

 

Did it really fall. I think not. Just the measure is not accurate to today. Consider, that I rent (as a rentvestor), so am not included in the stats as a "home owner" (I am included as a "renter"). Yet we own many properties. How many more rent and investor. So all the rentvestors move into just one of their investment properties, and suddenly home ownership would spike up overnight.
Silly measure these days compared to maybe 1960's.
Yes it is a lifestyle choice, but to say home ownership has declined is inaccurate. I would say increased, as"renters" own 3,5,10 properties.

 

I don't think I even heard of avocados, smashed or intact, till well after we bought our first home!

Maybe just as well.......
Marg

 

No - the darkside/a lesser website's newsletter

 

No single factor IMO, on top of previously mentioned is the facr that people are also getting married later, are more wary of buying in defacto situations than in the 70s, more people rely on dual incomes to support loans, renting is not viewed as much of a negative as before, people are more mobile so they don't know if they will stay in the industry/city/country as much as in the past which naturally means some will be less inclined to purchase, I'd say more are self employed to some extent or considering being self employed which means either capital that would have gone to purchase being used elsewhere or finance being harder to obtain or both etc.

Also, the difference in area/type of house on offer for buying vs renting in the past compared to now is a greater IMO in terms of difference in amenity.

Someone with 600/wk to spend on mortgage vs rent will see a massive difference in amenity in Sydney in 2017 vs in Sydney in previous decades and so some will decide to go with renting instead. Whether or not that's wise is abother discussion but IMO it is a factor.

Highly complex issue with many variables to it that can't be simplified with a glib couple of sentences IMO, as much as the today tonight and clickbait nature of life today will like it to be

 

Probably because they were a lot rarer then, it's like trying to to equate availability of Japanese food to home ownership, it's irrelevant.

In the last 20 years alone avocado consumption is up 300% per person in Australia, home ownership has nothing to do with it, silly link started by Bernard salt

From cattle feed to $50 a tray: how Australia’s avocado ascended

 

Me too! It took me 10 years to get my first degree because I kept travelling, working in remote places and otherwise bumming around enjoying life. I didn't buy my first property until 36. Very late in the game but I wouldn't trade my misspent youth for anything.

 

Maybe it's just because Millenials are (allegedly) buying shares instead of property?

Australians under 35 are being encouraged to invest in the share market instead of buying a home.
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Why millennials are choosing shares over home ownership

 

Have to have my say here....I'm a child of late 50s.
I was a very lucky girl....1st in family to attend a uni. And Whitlam.
But yes...married at 22. First home in our local area at 23. Saved hard. But we saved and went to Europe on the first large wave of Aussie travellers. Put off having kids till I was 30. So they are " only " late 20s.

BUT...my parents encouraged me on our new type of life...they were happy for us to travel before kids....our work ethic was good. My parents were fairly well off for then...but liked that we did it our way...and had more choices! Certainly did not do it same as them.

Now my kids are uni educated...have a great work ethic,...but are doing it their way. Between my 2 children , they have travelled overseas over 10 times....they don't think twice. No property purchase...but enjoying their lives their way. What a great appreciation of world culture. And yes...I think they have too many smashed avos...

I congratulate them on their lives. Smart, generous and adventurous. Nice people. With a world view.

I like the fact that they are...doing it their way. When we say we want our children to have better lives than us...it doesn't mean better lives like us.

Proud parent.

 

Haha, I can do better by 1 year (total 11 yrs for 1st degree). Took me 2yrs to do part degree straight out of high school, which I then dropped out of. Then another 9yrs to finish another actual degree. So technically, I got my first degree at the ripe old age of 31! (after 11yrs of total uni).
First property at 32.5. But isn't it funny, how the late starters become high income earners (I always thought uni and formal education was a waste, but companies just wanted to see "a degree"), like a degree matters in IT, when Google wasn't even around I did a degree.
Will retire at 45 . zero to hero in 14yrs. Think it's because we enjoyed youth, and then later hit peak earning potential earlier in a career.

 

Travelling is a brilliant way to learn.

 

Eep! That sounds like me too. My first degree (eventually) was IT as well. We started uni with DOS and Unix machines, no GUI, no graphical WWW. We were in PINE for email and Lynx for web browsing. Graphical web came in while I was at uni. Amazing time to be alive!

 

All this talk, and crying about home ownership in 20's, and people never being able to afford a home is rubbish. Enjoy your 20's, travel, live life. Starting a career later is not that bad. People don't take you seriously in your 20's. In your late 20's and 30's you can hit peak earning more quickly (and not waste 10yrs kissing arse).

@MTR "While the proportion of 25 to 34 year olds owning the home they lived in had fallen from around 60 per cent to around 50 per cent since the 1970s"
Hey, I'm 41, and don't own the home I live in. I rent (and invest). Hence why the whole "home ownership" statistics are complete rubbish. Poor me. "home ownership" is so out of reach . The definition is so 1950's and stupid. That's why the numbers and graphs show a downward trend. People like me that rent the place they live, and then hold multiple investment properties.

 

I am in my mid 40's and we bought our first home when I was 29 (paid $195K). We already had 2 kids and the main issue was that no bank would loan me money as I was self employed. Regardless of the income and savings I had. It was not easy to buy a property than and it will not be easy for my kids. Accept they can leverage of their parents if they want.