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With home prices rapidly rising over the course of last year and stock in short supply, it appears that a prime cohort of buyers are rethinking their ownership dreams.
According to a study conducted by InsureandGo, 71 per cent of adults under 30 have said they’re planning on putting their money towards travel, rather than property, in the next 12 months.
By comparison, that percentage is lower for the generations above them: 65 per cent of 31- to 50-year-olds and 51 per cent of over-50s said they would prioritise holidays rather than property purchases.
The insurance firm flagged high interest rates and rising house prices for pushing young Australian adults to spend on short-term enjoyment rather than long-term investments over the next year, with the latter seeming increasingly out of reach.
While the hurdle to home ownership is certainly high, it should also be noted that behavioural preferences between the age groups also drive spending habits: the earlier years of adulthood are typically those where Australians might take the opportunity to travel before planning to settle down with a mortgage to upkeep.
At the same time, the latest data from ANZ and CoreLogic also indicates that the average age at which Australians buy a home is growing older. Recently, the firms found that Australians are now typically becoming first home buyers at the age of 36.
And in its last census, the Australian Bureau of Statistics found that the likelihood of owning a home when aged 25–39 years has decreased for each successive living generation. Over half of Millennials in 2021 were home owners, compared with 62.1 per cent of Generation X in 2006 and almost two-thirds (65.8 per cent) of Baby Boomers in 1991. When aged 25–39 years, Baby Boomers were three times more likely than Millennials to own their home without a mortgage.
“When forced to choose between an eye-watering mortgage and a travel experience, Millennials and Gen Z Australians are opting for the latter, and this is largely in response to the housing crisis,” InsureandGo chief commercial officer Jonathan Etkind said.
Though he also noted that younger generations have always shown more of an inclination towards “event” spending.
“This trend is fuelled by the ‘experience culture’ that erupted over the past decade and saw young Aussies eschew spending money on ‘stuff’ to making memories instead,” Mr Etkind said.
InsureandGo also indicated a substantial jump in home ownership rates between the different cohorts. According to their research, 81 per cent of over-50s Aussies are home owners, compared to 75 per cent of 31- to 50-year-olds and 45 per cent of people aged 18 to 30.
“I believe the pandemic also has a role to play with these trends,” Mr Etkind opined.
“For many of us, being holed up in our homes for extended periods between 2019 and 2021 and being unable to travel sparked some seriously itchy feet. Combine that with skyrocketing property prices, and you’ve got a generation of younger Aussies who have perhaps been taught to rethink the great Australian dream.”
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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