A generation of Australians locked out of home ownership could face consequences stretching far beyond missing out on the traditional quarter-acre dream, with an economist warning the divide could reshape wealth, retirement and even how people view their future.
For generations, owning a home has been one of the foundations of financial security in Australia.
But as property prices continue to outpace incomes, that foundation is becoming increasingly difficult for younger Australians to reach – potentially creating a generation that enters retirement still paying rent and without the wealth accumulated through owning a home.
Measured against the incomes of middle-income earners, Sydney ranked as the second-most expensive city in the world behind Hong Kong, while Melbourne ranked fourth and Adelaide ninth.
For employees, that meant continuing to adapt as industries and technology changed.
Saving also remained important, despite changes to the tax system making it less attractive than it had once been.
But perhaps the biggest consequences of declining home ownership will not become apparent until today’s younger Australians reach retirement.
Australia’s retirement system has traditionally operated on the assumption that many retirees will own their home outright, dramatically reducing their living costs once they leave the workforce.
A generation of lifelong renters would challenge that assumption.
Even Australians who manage to break into the property market are not necessarily escaping the financial squeeze.
Larger mortgages and higher repayments mean a greater proportion of household income can be swallowed by housing, leaving less money for everything else.
That makes Australia’s housing affordability problem about considerably more than whether younger Australians can get their name on a property title.
