A hot property market emboldens homeowners to have more children while renters are more likely to put it off, a new study has found.
The implications are far-reaching, experts say, as surging house prices exacerbate the country’s already stymied population growth and economic prosperity.
Ceri Kidby-Salom and her partner, Scott Ford, feel they can’t start a family until they own a home, which is beyond reach. Credit:
In an Australian first, plans to have children have been measured against property prices, with researchers finding that rapidly rising house prices are closely tied to intentions (and outcomes) of starting a family.
The study found a $100,000 increase in housing wealth was associated with an 18 per cent rise in the probability of having a child, with married mortgage holders the most likely to have children.
Meanwhile, renters who already have children are likely to put off having more due to rising property prices that lock them out of homeownership.
The study’s lead author, University of Sydney school of economics associate professor Stephen Whelan, said housing constitutes a major cost of raising children; so, as the cost of housing rises, so does the cost of having children in Australia.
“This is something that hasn’t been really talked about in Australia,” Dr Whelan said.
“We’ve talked about the baby bonus, we’ve also spent a lot of time worrying about house prices and getting into homeownership.
“One of the unidentified implications … is that for some households it may have encouraged greater fertility, but for those who remain in rental tenure, it would tend to discourage having more children.
“It’s among the renters with children: they might be in an apartment and that challenge of getting into an owner-occupied dwelling means they’re less likely to have more children in the future.”
For some people, it has arrested plans of starting a family altogether.
Brisbane renter Ceri Kidby-Salom and her partner, Scott Ford, said starting a family is off the cards until they buy a house.
“It’s kind of this double whammy. I’m 35 and should be able to buy a house and should be able to have a family but I can’t do either of those things because I live in a [rented] small two-bedroom inner-city apartment, and it’s scary, and it’s frustrating,” said Ms Kidby-Salom, who is originally from Melbourne.
The couple have been looking to buy a house for some months and have been priced out by the latest property boom.
“A few years ago I was thinking I would potentially be able to afford a place in Melbourne, and even that is out of reach,” she said. “Buying in Brisbane was more affordable, and that is not realistic any more.
Scott and Ceri feel locked out of both the property market and parenthood. Credit:
“It’s a fine balance between what we’re comfortable with and what we’re going to sacrifice. It’s impacting our future that we can’t make these plans.”
Brisbane has notched up a median house price record of $702,455, up 15.3 per cent in the year to September 2021 on Domain data.
Meanwhile, in Melbourne, Catherine Hall is in a similar situation. The 30-year-old renter is ready to start a family with her partner but is delaying that until they have the security of homeownership.
“We’re pretty much at a point now if it wasn’t for the housing situation we would think about having kids in the next few years, but it seems really out of reach and reality is hitting us that it’s not practically possible,” Ms Hall said.
“When you’re renting, because you can be made to leave a rental property every 12 months or so, you don’t know how much rent you’re going to be paying the next year. The market fluctuates so much, and it just depends on what’s available … you get pushed into whatever you can take and if you’re in a situation with kids then things would be financially tighter.
“It is upsetting, and I find it quite infuriating that it’s treated as a choice to not own a home when there are so many factors that are making it impossible for all intents and purposes.”
Melbourne’s median house price broke a record of $1,037,923 in the year to September, on Domain data.
Despite the pandemic causing a vast number of Australians to bunker down at home last year, there was hardly a baby boom.
In fact, births declined in 2020, down 3.7 per cent – or 11,463 fewer births – from 2019, figures from the Australian Bureau of Statistics show.
The largest declines in registered births were in New South Wales (3330 fewer births), Victoria (3846 fewer births) and Queensland, which registered 2279 fewer births. All three state capitals broke new median house prices in 2021.
The fertility rate also continued to decline in 2020, sitting at 1.58 babies per woman in 2020, down from 1.66 in 2019 and 1.95 since 2010.
The total fertility rate required for replacement – the level at which the population is replaced from one generation to the next without migration – is considered to be 2.1 babies per woman to replace herself and her partner. It has been below that replacement level since 1976.
The ramifications of this baby bust, exacerbated by spiralling house prices as the study found, are wide-reaching. They not only affect younger generations by delaying family formation but hinder them, as well as the broader Australian society, down the track.
The Australia Institute’s Centre for Future Work senior economist Alison Pennington said it has become a privilege to have a family.
“We’re witnessing an historic erosion in Australia’s ‘fair go’ for youth,” Ms Pennington said.
“Weak labour markets since the GFC and housing price inflation have made a full-time permanent job and owning your home rare privileges for young people. Since secure incomes and housing are critical to family formation, having a family is the new privilege.
Despite the pandemic forcing a vast number of Australians to bunker down at home last year, there was hardly a baby boom.Credit: Shutterstock
“Australian economic activity is unsustainably dependent on constant housing price inflation, including construction and household consumption. After almost a decade of stagnant real wages, housing price inflation has supported owner-occupier households to ‘feel’ richer. The wealth effects of rising house prices have supported family formation for the propertied, while children in renting households are more likely to be raised in poverty.
“Structural barriers for young people to access homeownership impacts on their capacity to build wealth and a family. Homeownership rates for 25- to 34-year-olds have declined from 61 per cent in 1981 to around 37 per cent.”
Associate Professor Whelan said property prices slowing down birth and fertility rates would go on to affect the rest of the country for years to come.
“The long-term implication of that is we have fewer younger workers to pay for the services we need.
“That has long-term implications for the affordability of government services to the extent that younger individuals pay more taxes and draw on less government services.
“Then that generation won’t have a younger generation to support them with their taxes.”