Tory Shepherd: It’s nearly impossible for many young people to buy a home, and hard for older people to stay in theirs

“Home ownership will always be supported,” said Josh Frydenberg this week. Tell that to all the people who can’t get a foot in the door.

A friend went to an auction recently where the house went for more than $300,000 above the expected price. She wasn’t alone in experiencing this.

The Advertiser has consistently reported on the disappointment of would-be homeowners as prices soar far above their budgets. This week, Adelaide’s median house price rocketed to a record $518,000. Melburnians and Sydneysiders probably think that’s cute as prices there have whooshed past $1m.

But no one on South Australia’s median income of about $67,000 a year would find anything to love about this. To avoid paying mortgage insurance on the median SA house you’d need more than $100,000 in the bank. Try doing that on $67,000 a year.

It’s dire. It’s nearly impossible for many young people to buy a home, and depressingly hard for older people to stay in theirs as rates creep up and buying a new property becomes impossible.

Alex and Rachel with baby Eva, 1, in front of the home they recently bought at auction in Hawthorn. Picture: Tom Huntley

As for renting, the landlords have all the power as people scratch around looking for something decent. The recent Anglicare SA Rental Affordability Snapshot found that, of about 1800 private rentals advertised, none were affordable for single people on JobSeeker or Youth Allowance.

This dastardly unfairness doesn’t stop the real estate industry celebrating.

Real Estate Institute of SA chief executive Barry Money – in a sorry case of nominative determinism – said the price rises were “fantastic”. It showed the real estate market had been able to “surge forward and prosper”, he told The Advertiser.

Later he told the ABC the house price increase was a great “success story”. When pressed on whether the boom was shattering the dreams of young people wanting to buy their first homes, he ruminated on cycles, booms and busts.

“It’s always been the case that when you’re entering the market for the first time, it’s hard,” he said.

Sure, it has always been difficult for some. But it has become a hell of a lot harder for many. It must be comforting for those who paid about three times their income for a house back in the day to blame today’s kids for splashing their money on avocado on toast.

To mythologise how they walked to their Adelaide school through the snow or rode there on a horse and ate cardboard just to buy somewhere to live while the kids of today waste their hard-earned on artisanal sour dough with smashed avo on top. But that’s a narrative completely undermined by the statistics.

Data from the Reserve Bank of Australia and the Australian Bureau of Statistics analysed by savings.com.au show the median house price in 1980s SA was about three times the median wage. Now, it’s more than six times Again, Sydneysiders might roll their eyes – in 1970 house prices there were about 4½ times the wages but by 2020 it was 12.2.

In his federal budget speech on Tuesday night, Treasurer Josh Frydenberg said that under the Coalition, “home ownership will always be supported”. He credited the HomeBuilder scheme with helping get more first-homebuyers into the market.

But a $25,000 grant for those spending at least $150,000 on a new house or a renovation is only really useful for some.

Another measure will help 10,000 first-home buyers build a new home with a five per cent deposit, he said. Again, for new homes only.

And 10,000 single parents will be supported to buy a home with a 2 per cent deposit. This may work for people with a higher income and no savings, but risks luring people into repayments they can’t afford.

And the government is increasing the amount that can be released under the First Home Super Saver Scheme from $30,000 to $50,000 – meaning people can raid more of their retirement savings and lose the compound interest they would otherwise earn.

It’s not clear that there’ll be any downward pressure on house prices, and some are warning there will be upward pressure. On the other side of the ledger, the budget offers no hope for greater wage growth.

Meanwhile, the burden of paying back the unimaginable levels of debt racked up in response to the pandemic will fall mainly on the shoulders of younger Australians who don’t have the bulwark of a home.

Consider the avocado-on-toast trope smashed.