Are younger generations finding it harder to buy a home? Data says no

We all know that there’s a housing crisis and home ownership is slipping out of the reach of young Australians, right? But what if I told you that while younger generations were delaying buying their first home, they were rapidly catching up to those older than them?

That is what the home ownership figures published by the Australian Institute of Health and Welfare suggest. The analysis uses census data to calculate the percentage of people within a five-year cohort who own homes and how that changes throughout their lives.

Sure, the figures show that people are now less likely to own a home in their late 20s than in decades past. That is consistent with the fact that young people stay living in the family home longer, finish formal education and enter the workforce later, and delay moving in with partners and starting families.

But if you look more closely, and consider trends for people in their 30s and 40s, the picture starts to look quite different.

Australia-wide, Millennials are well and truly catching up with Generation X, and within that, each five-year cohort is catching up to or overtaking the one before. The trends are even more pronounced in certain states.

The high watermark of home ownership is the group born between 1947 and 1951, the most senior of the Baby Boomers. In 1976, when they were in their late 20s, 54.2 per cent owned a home. By 2021, when they reached their early 70s, 81.9 per cent owned their home.

For everyone younger, home ownership rates at each life stage have progressively fallen. It is unlikely any group will ever catch up.

Those born 1952-1956, 1957-1961 and 1962-1966 follow a similar trend. Each successive cohort is less likely to own property than the one before, though overall ownership rates are high.

When you get to Generation X and Millennials, the trends start getting less predictable.

Generation X was just as likely to own a home in their late 20s whether they were born 1967-1971, 1972-1976 or 1977-1981. It was roughly 43 per cent of the cohort of 25-29 year-olds at the 1996, 2001 and 2006 censuses respectively.

Younger Generation X (1977-1981) slowed down after that. Once they reached their 30s, they were much less likely than their older siblings and cousins to own a home, and they only finally started to catch up in their 40s.

Home ownership among Millennials (born 1982-1986, 1987-1991 and 1992-1996) has risen much more steeply. In the 2021 census, the percentage of older Millennials (born 1982-1986), then aged in their late 30s, who owned a home was 59.2 per cent. That surpassed the 58.9 per cent of younger Generation X (born 1977-1981) who owned a home in 2016, when they were in their late 30s.

The middle group of Millennials (born 1987-1991) had an even sharper climb, catching up elder Millennials in their early 30s. In 2016, 50 per cent of 30-34 year-olds owned a home, while in 2021, it was very similar at 49.7 per cent.

The data does not include the newly or nearly adult Generation Z, the eldest of whom were not yet 25 at the last census, or our Generation Alpha children. But the trend is clear – Australians are less likely to buy a home in their 20s, but once they reach their 30s, they are making up for lost time.

There are a few reasons this could be occurring. First, let’s cast our mind back 30 years, when the younger half of Generation X were entering adult life. Give or take six months, this is my age group.

Youth unemployment was still high after the early 1990s recession, and we were encouraged to go to university, travel and generally delay settling down.

The property market was already on a bender because of the massive fall in interest rates – from January 1990, when the cash rate famously hit 17.5 per cent, to about 4-5 per cent for the rest of the decade. Many of my peers thought it advisable to wait for a property bust that never happened.

By the time we hit our 30s, house prices were already astonishingly high compared with average salaries, and it was definitely a two-person endeavour for most. I know many people with degrees and good jobs who managed to buy a home only in their 40s, often in the sad circumstances of losing a parent and receiving an inheritance.

Millennials had the opportunity to learn from our mistakes, and judging by the statistics, they made property a priority from their early 30s.

Millennials are more likely than Generation X to be the children of Baby Boomers and benefit from the increasing trend for first home buyers to be helped by the bank of mum and dad.

The Boomers are the wealthiest generation in history and around the world, economists are talking about the “great wealth transfer” already under way because of parental gifts or inheritances.

In Australia, the Productivity Commission expects a transfer of about $3.5 trillion in wealth to pass from Boomers to subsequent generations over the two decades following 2021.

Last year, a Curtin University survey of 1725 Australian parents – mostly aged 45 to 64 – found that more than half had helped at least one of their adult children buy a home, and the trend was increasing. That’s all well and good for individuals, but not great for social equality and mobility.

I ran my theories by Associate Professor Ben Phillips at the Australian National University. He adds that housing affordability actually improved in some senses between 2016 and 2021 because interest rates were low and rents did not increase much, allowing more people to get into the market for the first time.

Meanwhile, many of the Generation Xers who finally bought a home in their 40s may have a roof over their head but not much equity, thanks to starting late in an expensive market.

In a decade or two, superannuation balances could suddenly evaporate as people choose to pay off their eye-watering mortgages before retirement. But that’s a problem for another day.

Caitlin Fitzsimmons is the environment and climate reporter for The Sydney Morning Herald.

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