Rising house prices are not only making it harder and harder for people to buy and own a property, they’re also causing droves of young adults to remain in digs with their parents for indefinite periods.
CoreLogic’s Perceptions of Housing Affordability Report (2017) highlighted the depth of frustration felt by said young adults. 62% of people living at home said that they just couldn’t afford to move out.
The data also suggested that this situation is ever increasing – applying to young adults mainly in their 20s and 30s. For Mums and Dads where this is less than ideal, there sadly seems to be no end to the burden in sight.
Flying The Nest At A Much Later Date
So people are struggling to fly the nest when they’d like to these days, but the situation does differ from state to state. In Queensland, 38% of residents are more likely to have moved out of the parental home by the age of 25 years old.
In other states, moving out of home before age 35 seems to have become the norm – much later than in previous years.
CoreLogic’s study shows that 77% of people living with their parents in South Australia and the Northern Territories, will move out before the age of 35. In Queensland, Victoria and NSW, the figure dropped to 75%, 69% and 71%.
The survey also found that Tasmanians are the least likely to decide when they were going to move out – with 46% of respondents saying that they “did not know”.
Whilst CoreLogic’s report highlighted many reasons for this stay-at-home trend, the main reason was found to simply be the cost of housing. 27% of respondents indicated that their plan to stay at home longer was geared towards saving up for a deposit.
Leaving Home: Creating A Sizeable Hole In Your Pocket
So why does leaving home hurt so much? Well the CoreLogic data suggests that many people are opting to stay at home longer than in previous generations, and this is due to housing affordability in Australia becoming much more challenging over the past 15 years.
The cost of buying a house takes roughly 7.2 time the annual income of a typical household. This is up by 3 points since the 4.2 times annual income from 15 years ago. Recent data also showed that it takes around 1.53 years of household earnings to save 20% for a property deposit.
A typical loan of 80% property value, requires 39% household income in order to service the debt. This is a sharp rise when considering the 25% from 2001. Home ownerships is fast becoming something that high-income privileged earners can achieve, with ever-increasing levels of expenditure and debt servicing.
This situation offers an insight into housing affordability across Australia, but it also affects renters. A third or more of renters across the states said that they’ll need to put more than the traditional 30% of their income into securing a mortgage.