Rubbish! This galah has rightly noted the big increase in house prices but is oblivious that home unit [condo] prices have not followed suit. Home unit prices have increased much less. And the way apartment towers keep popping up there should soon be downward pressure on unit prices. Home unit prices should remain affordable even when house prices do not. Home unit living can be perfectly congenial
Australian kids born in major capitals today face a “ticking time bomb of inequality” that could force them to rent for life as homeownership becomes an inherited luxury.
That’s the prediction from a leading futurist, who has warned the government may need to level the playing field as the bank of mum and dad drives entrenched wealth between Australians and their homeownership dreams.
It comes as newborn babies can take their first steps on the property ladder before they can walk, with fractional property investment now open to minors via BrickX.
Global futurist at the Thinque think tank Anders Sorman-Nilsson said while Australia’s cultural affinity with homeownership was driving markets like Sydney, Melbourne and Brisbane today, it would price out more and more residents in the coming decades.
“You may (in the future) only be able to afford your own home in Sydney and Melbourne if your mum and dad are taking out some of the equity in their own home to help,” Mr Sorman-Nilsson said.
“This could be a ticking time bomb of inequality. So there will have to be something done to ensure that this Australian dream will remain.”
Affordability issues already mean large parts of Sydney are out of reach for many buyers.
He noted some countries had implemented wealth and inheritance taxes to stem the impact of intergenerational gifts such as the hundreds of thousands of dollars some parents offered to help their kids into a home.
Price growth might be alleviated as greater “digital democracy” made knowledge-based jobs more accessible in regional areas, but it was still likely many kids born today will never own a home.
“You will see new European-style housing arrangements, with people who rent for life or rentvest – buying an investment property, but renting where they want to live,” he said.
Proptrack (realestate.com.au’s research division) economic research director Cameron Kusher said price growth over the past 30 years was unlikely to repeat in the coming decades as it had been buoyed by falling interest rates, which were more likely to now rise.
But Mr Kusher said even a conservative estimate would put home price growth ahead of inflation, which typically rises as wages do, meaning today’s prices could still be doubled in 30 years time when newborns would be looking to buy.
“Most parents will help via their property increasing in price,” Mr Kusher said. “But unfortunately homeownership has been falling, so not everyone will be able to do that.”
He said parents might consider shares or fractional property purchases to help their kids