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Home ownership dream shattered over the generations as deposit hurdle grows for first home buyers

By Chris Ferris
02 November 2021 | 1 minute read
Chris Ferris

The evidence continues to mount, proving that it is much harder for the younger generations to get a foot into the property market. The harsh statistics presented by years of census data are undeniable and track the continued decline in home ownership since the 1940s.

Unveiling a slow and steady decline in home ownership for young people, the census data shows that in the period 1947-1951, 54.2 per cent of people aged 25-29 were home owners. But by 1971, this had dropped to 43.5 per cent, and 20 years later, in 1991 was 37.4 per cent – and the latest data from census 2016 shows that 15 years later, home ownership for young people is still at this low level of 37.4 per cent.

While we need to wait until 2022 to see how the results from the 2021 census, it is a sure thing that the home ownership data will have declined further for young Australians.


Home ownership is something young Australians are delaying, and this is a generational pattern that shows no signs of ending.

It has never been harder for first home buyers to get into the property market. And as if it isn’t already hard enough, NAB recently predicted Sydney’s house prices would rise by 17.5 per cent over 2021, making it even harder to get on that property ladder.

Australian Prudential Regulation Authority (APRA) has also signalled change is on the horizon for borrowers, tightening home lending criteria with tougher serviceability rules. The minimum interest rate buffer on home loan applications has just increased from 2.5 per cent to 3 per cent.

Commentators say this could reduce borrowing capacity by around 5 per cent on a typical loan, and with average house prices over $1 million – that can translate to $50,000.

And all this hits hardest on first home buyers who need to once again lower expectations, save more and wait.

But it already takes up to six years for the average Australian first home buyer to save a 10 per cent deposit, according to Canstar, almost double the time it took in 2006. And the median house price has more than doubled in this time from $470,000 to a mind-blowing $1.05 million.

Media headlines obsess on housing affordability, but the real stumbling block that keeps home ownership unattainable is the first hurdle – the upfront deposit requirements. Affordability only impacts existing homeowners or those that already have their deposit saved and measures the percentage of their income needed to service a mortgage.

Affordability doesn’t represent the people locked out of the property market who are desperate to buy – but simply can’t because of deposit requirements.

The Australian government has recognised the deposit as a significant obstacle and addressed it in the new First Home Buyer Scheme (FHBS). The scheme allows first home buyers to purchase a home with a 5 per cent deposit of the property value and avoid paying costly Lenders Mortgage Insurance (LMI).

It is great to see the scheme introduced and the government acknowledge that the deposit is the stumbling block and insurmountable hurdle keeping many locked out of the property market.

Without help to get over the deposit hurdle, a typical buyer would need to delay purchasing for several years. And so, the cycle continues – with buyers trying to save a deposit amount that continues to escalate and remain out of reach.

There are literally thousands of people in stable employment with strong incomes that struggle to save the massive, ever-increasing sum for a deposit, especially when the property price and relevant deposit amount both increases relentlessly every single month for years.

Can the next generation of home buyers be the first to buck this 70-year-old trend? Will government programs and innovations from the private sector like Coposit deliver the edge needed to break this generational cycle and deliver a new breed of younger first home buyers?

Chris Ferris is the CEO of Coposit.

Home ownership dream shattered over the generations as deposit hurdle grows for first home buyers
Chris Ferris 2 reb
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