A distant dream: 37% of Australians say they’ll never afford a home
Despite falling property prices, young people are feeling more disheartened than ever about their prospects of owning a home, according to new research by Finder.
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A nationally representative Finder survey found more than a third (37%) of non-homeowners say they don't think they will ever be able to afford a home, a substantial increase from 23% in 2021.
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Among gen Z non-homeowners, the percentage who feel they will never be able to afford property has increased from 6% in 2021 to 15% this year, while for millennials it has grown from 21% to 34%.
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Investment bank Jarden forecasts property prices in Australia could fall by as much as 20% over the next 18 months.
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A 20% decline would knock $280,000 off the median Sydney house and $189,800 off a house in Melbourne.
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Richard Whitten, home loans expert at Finder, said it was sad but understandable that many young people were worried about the prospect of owning a home.
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"House prices have skyrocketed over the past few years, and have become downright ridiculous in some areas.
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"But with economists predicting a recession and interest rates finally rising from their rock-bottom lows, it's likely we'll see house prices fall in the second half of 2022, especially in Sydney where prices can be more volatile."
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Finder research shows more than 1 in 4 (26%) Australians believe property prices in their area will decrease over the next 12 months, compared to just 7% last year.
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Whitten said given the strong price growth of recent years, a small decline in prices doesn't help housing affordability all that much.
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"That said, the situation should improve as interest rates continue to climb, and prices fall further.
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"This is a good opportunity for aspiring homeowners to get in while prices are lower, and balance out the extra costs that will come with rising mortgage rates."
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Finder research shows only 27% of Australians believed it was a good time to buy property in March, a record low and down from a peak of 67% in December 2021.
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That figure has since increased slightly to 33% in July, indicating that some may be starting to see the potential in a declining housing market.
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Whitten said not everyone can afford property, and some don't even want to.
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"Australians are obsessed with property, but there are other ways to build your wealth.
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"Start with keeping your cash in a high interest savings account. Savings rates are becoming much more competitive, and as they increase all that interest you earn will compound.
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"Share trading is also a way to build wealth, and you can get started with as little as a dollar with some platforms, or even investing your spare change through micro-investing apps.
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