After new figures were released by the Australian Housing and Urban Research Institute in September 2023 showing home ownership rates were falling among people aged between 25 and 34, Professor Elizabeth Sheedy from the Department of Applied Finance set out to discover what decisions and challenges young adults were facing, and whether they had given up on the idea of home ownership.
Freedom calls: Young adults who were surveyed showed a strong preference for travelling and freedom from debt over owning a home, Professor Sheedy says.
Professor Sheedy and her colleagues interviewed 70 young adults aged between 18 and 40 for the study. The research found that 60 per cent of the respondents consider home ownership to be a major life goal. Another 19 per cent said while they would like to own a home, they don’t currently see it as a pressing life goal. For some, it is not a goal at all. And for a small number of people - seven per cent - home ownership is a goal they feel is unattainable for them.
“One of the big questions we had for the study was how housing relates to people's broader financial and life goals,” Professor Sheedy says.
“We found many are ambivalent towards home ownership and have other goals that are much more of a focus: developing careers, travelling and enjoying their freedom.
“As one participant said, ‘I think I would regret [it] if I was old and had a house, but no experiences … life is short’.”
Delaying ownership and avoiding debt
Professor Sheedy’s paper Young adults and the housing challenge, co-authored with Dr Syed Shah and Dr Terry Pan, is currently available on the Social Science Research Network (SSRN).
“For the group that is ambivalent about home ownership or who say it’s not a life goal for them – around 14 per cent – one of the big drivers is that people just hate debt. One participant talked about the fact that mortgage means ‘death contract’,” Professor Sheedy says.
“There are some very strong preferences for freedom from debt and just freedom in general – freedom to travel or explore different career options. People don't want to pin themselves down to a mortgage contract that would take away their flexibility.”
Researchers also discovered people often had a rosy view of home ownership and felt it would be a solution to a lot of their problems, but once they had achieved it, they felt the experience of ownership was costly, stressful and disappointing.
“One participant purchased a property with an ex-partner, then bought him out when the relationship broke up and moved interstate for work. Now that property has terrible storm damage, so she can’t rent it out but still has to pay the mortgage,” Professor Sheedy says.
While there are parents loaning or gifting money to their children, it is even more common to provide free board and lodging while they save up for a deposit.
“I think it would be helpful if people had a clearer understanding of the risks involved. But of course, the property industry doesn't promote that. Real estate agents and banks aren’t highlighting the risks to potential owners. Sometimes people go into home ownership without being fully aware of what it's really going to be like.”
Making sacrifices and staying home
For the young adults in the study who had purchased their own property or were planning to buy a home, researchers found many were making significant sacrifices to achieve their home ownership dreams, such as avoiding eating out or going on holidays.
Both ways: Professor Sheedy, pictured, says a public landlord rating would improve conditions for renters by addressing accountability on both sides of the rental equation. Image: Jesse Taylor
Some also had help from their parents, whether in the form of advice and moral support, financial help with a deposit, provision of guarantee on a mortgage or co-ownership, or free or reduced board while they saved.
“While there are parents loaning or gifting money to their children, it is even more common to provide free board and lodging while they save up for a deposit,” Professor Sheedy says.
“If you're under 30, there is absolutely no shame in living with your parents. It's considered very normal – I was surprised how many people are living very happily at home with their families.”
Improving conditions for renters
While Professor Sheedy says that the recent legislation introduced by the NSW Government to ban ‘no fault’ evictions is a welcome step forward, more needs to be done to improve conditions for renters, such as longer leases and more accountability for landlords.
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While placing caps on rental increases could be helpful in the short term, she says it may remove the incentive for landlords to improve properties.
“I think there should be some kind of system where landlords are rated so that there is more accountability for bad landlords. If landlords are not maintaining the property or treating their tenants properly, that information also needs to be made public. It shouldn't just be a one-sided thing where the tenants have to provide all the references,” she says.
As a follow-up to the initial qualitative research, Professor Sheedy is already planning to conduct more large-scale survey work with one of her PhD students to see how widespread these attitudes to home ownership are in the broader community.
Elizabeth Sheedy is a Professor in the Department of Applied Finance in the Macquarie Business School.
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