Busted! Myths about millennials and home buying
From Baby Boomers to Gen Ys, it seems everyone today has an opinion about millennials buying homes. But what’s the truth and what’s just a myth?
Let’s look at some of the numbers around millennial home ownership and split the facts from the fiction.
Myth: Millennials will never own homes.
Let’s knock this one out right away. While some millennials are long-term renters and others outstay their welcome at their parents’ house, it’s an over-exaggeration to say that millennials overall aren’t buying homes.
Recent reports even suggest the opposite. A combination of government assistance (First Home Loan Deposits Scheme and other stimulus packages), low interest rates, a weakened housing market and the ability to save more during COVID-19 lockdowns is helping more millennials take the first step onto the property market.
It isn’t just a recent phenomenon either, with another survey finding approximately 28 per cent of Australians between 18 and 36 own the home they live in. This is a low number compared to participants from the US, China, Malaysia and most other countries involved in the survey, but it’s still a considerable percentage.
It’s clear that millennials in Australia will (and indeed already do) own homes. This myth about millennials and home buying is officially busted.
Myth: Millennials don’t care about owning a home.
Even if home ownership is less attainable for millennials, that doesn’t mean they don’t want a place to call their own. Despite the growing obstacles, this Sydney Morning Herald article reveals that owning a home is still a high aspiration for the younger generation.
Over half of the millennials from the survey said they’d be willing to make material sacrifices to enter the property market, while more than 25 per cent admitted they would prioritise buying their own home over starting a family.
Now that we’ve busted this myth about millennials not buying homes because they simply don’t want to, let’s explore the real reasons so many younger people are buying houses later in life compared to previous generations.
Myth: Millennials stay at home because they’re lazy.
It’s true that “cubby house syndrome” is a growing problem in Australia. As reported by the ABC, 34 per cent of millennials in 2018 said they wouldn’t be able to move out of home before they turned 30 – a significant spike from 20 per cent just two years earlier.
This trend isn’t necessarily driven by a lack of drive; there are genuine obstacles that make it difficult for the generation to branch out from their parents’ house. Discussing the same report, Savings.com.au highlights that 63 per cent of young Australians live at home because they can’t afford to move out. It suggested the top three barriers to doing so are:
- Saving enough for a deposit in an increasingly expensive-to-enter housing market (especially for those in Sydney and Melbourne)
- Getting a home loan approved at a time when lenders are extra-cautious
- Being able to afford stamp duty at up to 3 per cent of the property’s price.
Myth: Millennials aren’t good enough at saving to buy a house.
The stereotypical millennial is impulsive with money and prefers instant gratification, sacrificing their potential home loan deposit for expensive lunches and frivolous overseas travel. Who could forget the infamous smashed avo on toast furore of 2017?
But how accurate is this stereotype? Not accurate at all, as it turns out. Research reported by News.com.au reveals that Australians in their 20s are saving more than people in other age groups, while almost 66 per cent of those born in the ‘90s started saving immediately when they entered the workforce. Many are also saving money during COVID-19 lockdowns and accessing the government’s First Home Loan Deposit Scheme that aims to help first home buyers onto the property ladder with as little as 5 per cent deposit and without the burden of lenders’ mortgage insurance.
Your Mortgage discovered a similar myth-busting trend: Australians between 18 and 34 save roughly 32 per cent of their monthly income compared to a 23 per cent national average, making them the country’s "best savers".
Myth: Millennials only buy a home when they get married and/or have kids.
Here’s a surprising and somewhat fun fact to end on. You might assume that getting married or starting a family is the top reason for purchasing a home – and for past generations, you’d probably be right.
However, when it comes to buying a house as a millennial, it seems having a backyard and adequate space for canine companions is the top motivator. According to a survey discussed in this Marie Claire article, 1 in 3 millennials (33 per cent) listed wanting a dog-friendly place as a reason for buying a house (compared to getting married at 25 per cent and having kids at 19 per cent).