A senior economist says home ownership is likely to drop considerably by 2021, which is a “major issue” and will have “significant social and financial consequences”.
Speaking at the BIS Shrapnel Forecasting Conference last week, managing director Robert Mellor expressed concern over the long-term trends of home ownership.
“I think home ownership is in sharp decline,” he said, adding, “First-time buyer demand is not recovering ... it’s very weak, particularly in NSW.”
Mr Mellor said home ownership in the under-35 age group could drop from approximately 43 per cent (according to the 2011 census), to 23 per cent by 2021.
“That’s got long-term consequences,” he said.
“Many people won’t get into the market into their late 30s and 40s … they are in for permanent rental.”
Mr Mellor said unlike the Baby Boomer generation, younger generations are “not prepared to trade off and move to the outer suburbs”, adding that although some do, “a significant proportion don’t”.
He said when these “permanent renters” retire, they will still need to find money for their rental costs, as they will not own a property.
“I think there are significant social consequences, financial consequences, as a result of that change,” he said.
“I think governments don’t necessarily need to throw more money at it, but they certainly need to look at it. Otherwise, we’re in for a permanent change.
“It’s a major issue and one that we’ll need to watch closely in terms of how it impacts upon the market.”