Young Adults and the Housing Challenge

Abstract

The ‘Australian dream’ of home ownership remains a strong force influencing young adults. For the majority, home ownership remains a major financial/life priority, despite declining affordability. However we identify a significant minority (14%) that either reject home ownership as a financial goal, or express significant ambivalence. Most of the people in this group are single, well-educated and living in either Sydney or Melbourne. They tend to have good incomes or good earnings potential (in the case of students). Strong preferences for freedom and flexibility are apparent in a number of the cases. For those that seek ownership, the key drivers are: building an asset, stability/security, the ability to customise their home and to avoid the perceived perils of the rental market/landlords. Home ownership is seen as a key investment strategy that is accessible even by those with poor financial literacy. It is common for young adults to have unrealistic expectations of home ownership. We observed many with a weak understanding of the costs and risks of ownership. In some cases, this is leading to quite disastrous ownership experiences.  Surprisingly few are giving up on home ownership due to lack of affordability. Only 7% of our participants believe that ownership is unachievable, although many see it as a challenging goal. Some young adults are extremely motivated in their quest for ownership and are making sacrifices and trade-offs to achieve their goals. There is, however, a significant number who prefer to delay ownership in order to achieve other goals, including lifestyle. 

Keywords: housing attitudes, housing tenure