Much ado has been made about future generations, namely the Millennials, being locked out of Australia’s housing market. But have we been ignoring the potential social ramifications and focusing too intently on the financial ones?
According to chief executive of the UK housing association United Communities, Oona Goldsworthy, a growing air of rebellion and revolt is sweeping through the youth in her part of the world, and it’s just a matter of time before it catches on here.
“I think in Australia you haven’t yet felt the anger that is coming from young people,” she told domain.com.au, whilst visiting here as part of a world study tour on Millennia’s housing.
“It can be nice and civil and well-behaved, or it can be quite difficult to contain, and you don’t know where it can go.”
According to a recent global survey by HSBC Bank, Australian Millennials have among the lowest rate of home ownership in the developed world, second only to the UAE at just 28 per cent, while the global average is 40 per cent.
Goldsworthy says as a generation, the despondency felt by many Millennials at being virtually “cut off” from what was once a traditional right of passage into adulthood, can have a significant micro and macro level impact on society at large.
“On an individual level, this is very difficult for young people. But on a macro level it impact the success of our cities and economy, with Millennials making decisions to leave cities, delay families and fostering inequality and resentment between generations.”
Lessons from the Motherland
Goldsworthy cites the Greenfell disaster in Britain, where 71 people died in a London tower block fire, as a moment in her country when it came to light just how insidious the issue of housing inequality has become.
“Millennials want the same thing as everyone else,” she says. “Somewhere they can put down roots, feel a sense of belonging, have safety and security, and not having to keep moving.”
As in the UK, Goldsworthy points the finger at the property investment boom that’s occurred, particularly over the last five years, as the primary culprit in pushing young people out of our housing markets.
Booming a home owner has traditionally been an aspirational goal for Australians, which is evident in the fact that our historical rate of home ownership has hovered around 70 per cent for decades.
Recently however, a notable shift in this statistic has been causing concern, with the general rate of home ownership falling from 70 per cent in 2006 to 61 per cent in 2016. Not surprisingly, the private rental market has doubled in that time.
“That’s both a huge fall in home ownership and huge rise in rentals over a short period,” Goldsworthy notes. “They are really big movements. In Australia it’s because baby boomers are buying investment properties so Millennials can’t afford to get on the housing ladder.
“That’s a real intergenerational shift in expectations and a split in society between those who own property and those who have less and less hope of ever owning a home.”
Goldsworthy says it’s too early to tell what the outcome will be if this pattern continues, but the groundswell of resentment is gathering momentum amongst our youth and it’s a matter of time before it pours out into social ramifications.
Please, anyone…a solution?
Housing affordability is one of the most contentious topics of our time right now, with many a debate raging in political circles at both a federal and state level, around how to resolve this ongoing, worsening crisis.
Goldsworthy says we need to understand what drives this younger demographic in order to deliver an adequate response.
For one, Goldsworthy notes Millennials are more inclined to share than past generations, “with the sharing economy and not necessarily owning things like vehicles. They want accessibility, but not necessarily ownership. So different typologies of housing like sharing spaces, co-housing, or having small bedrooms but sharing facilities with others, could suit them.”
Various affordability initiatives are occurring in other countries, with academic exploration of current and future housing policies and an increased emphasis on things like expansion of the ethical market rental sector.
On a visit to Holland, Goldsworthy assisted in a pilot project between a youth homelessness charity and a university to convert shipping containers into ‘pop-up’ housing, which she says is totally do-able in “a lot of empty spaces” across Sydney.
“I can see old railway yards being redeveloped, space by the fish markets, there is lots of land that’s not being used that could become housing while we wait for longer-term developments to happen. You can do things that quickly and cheaply.”
Other potential solutions tabled for Millennials looking to break into the local housing market are an increase in community land trusts, where not for profit organisations manage real estate, and more micro-homes and mixed housing, as in Holland where Millennials live side by side with the elderly in combined projects.
With this increased insight from other countries, and projects intended to scrutinise the current lay of the land for future home ownership alternatives, we can only hope that our governments will start taking this situation more seriously in terms of future housing and planning policies. Because something’s got to give.
About the Author
Since 2008, David Thomas has built a business aimed at servicing the needs of property investors, owner occupiers and small business owners. David is recognised as one of the top 10 independent mortgage brokerages in the country, David and his team have settled almost billions of dollars worth of residential and investment loans over the last decade.
Known for his straightforward, relatable style, David believes by educating people about property funding; they fare better in the market. By sharing his expertise openly, some of the people he educates will likely become his clients. It's a win-win approach.
David Thomas is a credit representative (Representative Number 506153) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237).