‘Wouldn’t even get you a granny flat’: richer Aussies secure the lion’s share of mortgages

Shanine Pineda, 25, and Oli Fynn, 26, have accepted that home ownership is out of reach for them in their city. Instead, they decided to ‘rentvest’ on the other side of the continent.

Shanine Pineda and Oli Fynn in southwest Sydney say home ownership is out of their reach in the city, despite living with their parents to save. Picture: Nikki Short

Access to housing is widening the wealth gap as those on average ­incomes struggle to buy homes, which have been going to richer Australians for the past decade.

Housing affordability has worsened for both renters and sellers over the past two years as prices in both markets accelerated past Covid highs.

New analysis by The Australian of data from the Australian Bureau of Statistics and mortgage brokerage Lendi has revealed that this trend has become entrenched over the past decade, with the lion’s share of mort­gages going to those earning more than 20 per cent above the average full-time income.

The difference was even more pronounced in the country’s most expensive market, Sydney, where the average property buyer earns more than 35 per cent more than the general public. This follows comments last week by ANZ chief executive Shayne Elliott, who said home loans were now “the preserve of the rich”.

Home ownership becoming increasingly linked to wealth was also widening gaps the gaps it created in society, demographer Simon Kuestenmacher said.

He said middle-class Australia was continuing to shrink and erode. “It means that you make the division stronger,” he said.

“Young people are told you need to be frugal and save for a house but that doesn’t work. So then you will be renting for a long time. Or you might have inherited money at some stage, but some people won’t inherit all that much money because their parents weren’t asset-rich. So you just entrench this long-term inequality.”

Independent economist Saul Eslake is less convinced that Australians are suffering from a wealth gap as much as a generational divide.

“Unlike the US, or the UK or China, the gap between rich and poor, the wealth gap, hasn’t ­widened very much in Australia over the last 30 years,” Mr Eslake said.

“But the gap between the old and the young has.”

Homeownership rates have dropped consistently since they peaked at 73 per cent in the 1966 census. For many first-home buyers, the 20 per cent deposit ­remains the largest hurdle to ­accessing the market.

Housing researcher PropTrack found that just 13 per cent of homes were affordable to the ­average Australian, with the bulk of successful first-time buyers typically higher income households falling into the top 40 per cent overall.

Lendi chief operating officer Sebastian Watkins said it had never been harder to get a home loan, given rising prices, stagnant incomes, high interest rates and the 3 per cent serviceability buffer.

“Then throw into the mix high net migration and low stock levels and you’ve get this perfect storm of ­affordability,” he said.

In southwest Sydney, Shanine Pineda, 25, and Oli Fynn, 26, have accepted that home ownership is out of reach for them in their city.

The finance worker and her electrician partner thought they would be a part of the growth of Gregory Hills and surrounding new suburbs, but even after living with their parents to save on rent and starting a “side-hustle” ­selling perfumes, they realised it was hopeless.

Ms Pineda said it still came down to a bit of hard work and ­sacrifice.

“You don’t have to be rich,” she said. “Anyone can find a second income stream. I grew up around people that work their arses off to get a home loan and they aren’t rich.”

Instead, they decided to “rentvest”, buying a five-bedroom property in Perth for $500,000 which they rent out. “That wouldn’t even get you a granny flat in Gregory Hills,” she said.

Mr Eslake said rising house ­prices had not only benefited those who already had a home, but they had made it even more difficult for those who didn’t own a home to do so.

In turn, it enables the Bank of Mum and Dad to offer their children a leg up the ownership ladder.