Millennials will be renting into their 40s or for life
SYDNEY’S millennial generation are in danger of renting well into their late 40s and even becoming “retiree renters”, housing experts have warned.
SYDNEY’S millennial generation are in danger of renting well into their late 40s and even becoming “retiree renters”, housing experts have warned.
The predictions have followed a report from the Australian Housing and Urban Research Institute showing a 38 per cent spike in the number of households renting over the past decade.
Driving the growth was an increase in those renting well into their 30s, with the typical age of a Sydney homebuyer now at nearly 38, according to additional mortgage data.
Housing experts said current trends suggested many Millennials would be too old to get a 30-year mortgage by the time they could finally afford to put together a deposit for a typical home.
This was mainly due to high prices. Stumping up a 20 per cent deposit and stamp duty for a home priced at the Sydney median of $878,325 required more than $210,000, according to CoreLogic.
First Home Buyers Australia director Taj Singh said some Millennials wouldn’t have the savings necessary for such a high deposit until their late forties, sealing their fate as renters for life.
“First home buyers in their late 40s or 50s rarely get loans because banks know they will be into their 70s and retired by the time their loans expire,” Mr Singh said.
“In this kind of situation, people just give up on ever owning a home and become retiree renters. They put more of their money into super and try to enjoy life.”
Demographer Mark McCrindle said Sydney Millennials faced a tougher challenge than many of their peers in other cities around the world, including in the challenging UK market.
A recent UK study by the Resolution Foundation projected half of Brits born between 1981 and 2000 would be renting into their 40s and a third would retire as renters, but Mr McCrindle said Sydney Millennials would be worse off.
“The gap between prices and income is much wider here,” he said.
Demographia research showed a typical Sydney house is currently 11 times the average annual income of $83,000, while average unit prices are almost nine times higher. Only Hong Kong had a greater disparity between wages and prices.
Millennials appear to have taken note. A study by loan comparison site Lendi showed 56 per cent of Aussies between 18 and 34 did not believe they would ever own a property outright.
A further Finder.com.au survey showed 47 per cent of renters would consider renting for life if prices continued to increase.
Wentworth Point renters Angelique, 30, and Ciyasli Jasli, 33, agreed that home ownership felt increasingly far away.
“We’re trying to stay positive,” Ms Jasli said. “The kind of areas where we could afford to live are too far away from our family and we’re not sure when we’d could afford to buy closer to the city.
“The other issue is that it is really difficult to save while renting. Everything is so expensive.”
Greater numbers of lifetime renters posed significant social and economic risks for the long-term, Mr McCrindle said.
“Our rental market isn’t set up like in Germany and any of the other countries where the majority of people rent,” he said.
“Tenants here have less protection and typically only stay in their homes 1.8 years, so they don’t have that same stability or connection to their communities.
“Millennials are also expected to live longer than any generation before them and will need more money to retire on. That won’t be as easy if you’re renting in retirement.”
Originally published as Millennials will be renting into their 40s or for life