{"id":40562,"date":"2022-10-21T09:07:01","date_gmt":"2022-10-20T20:07:01","guid":{"rendered":"https:\/\/propertynoise.co.nz\/au\/?p=40562"},"modified":"2022-10-21T09:08:12","modified_gmt":"2022-10-20T20:08:12","slug":"will-falling-prices-help-a-generation-locked-out-of-the-property-market","status":"publish","type":"post","link":"https:\/\/propertynoise.co.nz\/au\/will-falling-prices-help-a-generation-locked-out-of-the-property-market\/","title":{"rendered":"Will falling prices help a generation locked out of the property market?"},"content":{"rendered":"

PHOTO: The challenge faced by Millennials trying to enter the property market is greater than that which confronted earlier generations.<\/strong><\/p>\n

Young buyers aspiring to purchase their first property have arguably never had it tougher, as new ABS data shows, but many are pondering whether falling property prices offer an opportunity to enter the real estate market.<\/p>\n

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For first-home buyers locked out of the property market in far greater numbers than earlier generations, the possibility of property prices falling significantly is an enticing prospect.<\/p>\n

Young buyers today are faced with property prices that soared during the Covid years when many of them were forced out of employment, lost work hours or saw their savings depreciate\u00a0against rampant inflation.<\/p>\n

Data released Thursday (20 October) by the Australian Bureau of Statistics has revealed that more than half (55 per cent) of Millennials (25\u201339 year olds) are homeowners compared with 62 per cent of Generation X and two thirds (66 per cent) of Baby Boomers when they were the same age.<\/p>\n

Analysis of Census data from 1991, 2006 and 2021 showed that home ownership, including homes owned outright or with a mortgage, for those aged between 25\u201339 years has decreased in each successive generation.<\/p>\n

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The 25\u201339 year old Baby Boomers in 1991 were three times more likely than the 25\u201339 year old Millennials in 2021 to own their home outright.<\/p>\n

But with property values\u00a0in decline in around four out of five Australian suburbs, young buyers who have managed to cobble together enough for a home deposit are timing their entry into the market.<\/p>\n

Rapidly rising rents and\u00a0record low vacancy rates\u00a0are tempting them to buy, while falling property prices are serving as a strong deterrent.<\/p>\n

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So what will it take for the market to shed the capital gains achieved over the past few years?<\/p>\n

Much\u00a0depends on interest rates\u00a0and what city or region you live in.<\/p>\n

\"How<\/p>\n

Source: CoreLogic.<\/strong><\/em><\/p>\n

After CoreLogic\u2019s national Home Value Index (HVI) surged nearly 29 per cent through the recent growth phase, the full extent of how far housing values will fall remains highly uncertain and largely dependent on the moves of the Reserve Bank of Australia over the next 12 or so months.<\/p>\n

Since the national monthly HVI peaked in April, dwelling values are down 4.8 per cent to the end of September, ranging from a 9.0 per cent fall from peak in Sydney, to Darwin, where home values remain at a cyclical high.<\/p>\n

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Byron Bay mansion used for Love Island Australia\u2019s third season sells | WATCH<\/a><\/h2>\n<\/header>\n<\/div>\n

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Source: CoreLogic.<\/strong><\/em><\/p>\n

Mainstream forecasts for a peak to trough decline also vary remarkably, but generally range from around 15 per cent to 25 per cent across the combined capital cities.<\/p>\n

First-home buyers, and others, trying to read the tea leaves and pick the bottom of the market<\/p>\n

A 15 per cent drop from the peak in April 2022 would take CoreLogic’s combined capital cities index back to roughly March 2021 levels. A 20 per cent drop in values would see the index 2.2 per cent lower than the onset of the pandemic in March 2020. A 25 per cent drop in capital city dwelling values would take the index 8.3 per cent below March 2020 levels; a similar reading to August 2016.<\/p>\n

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Couple raffle house for $5.40 a ticket after banks refuse mortgage<\/a><\/h2>\n<\/header>\n<\/div>\n

Risks and opportunities vary<\/strong><\/p>\n

CoreLogic Research Director, Tim Lawless, said across the capital cities there were varying risks, and opportunities for first-home and other buyers.<\/p>\n

\u201cArguably\u00a0Melbourne\u2019s housing market\u00a0is most vulnerable; a further 4.3 per cent slide in dwelling values would take Australia\u2019s second largest city back to March 2020 levels,\u201d Mr Lawless said.<\/p>\n

\u201cThis vulnerability isn\u2019t due to housing prices falling faster than other cities, in fact Melbourne\u2019s quarterly rate of decline, at -3.7 per cent through the September quarter, was a milder rate of decline compared with Sydney (-6.7 per cent), Brisbane (-4.3 per cent), Hobart (-4.5 per cent) and Canberra (-4.4 per cent).<\/p>\n

\u201cMelbourne simply didn\u2019t see as much growth in values through the upswing, with a 17.3 per cent rise from the COVID trough to peak.<\/p>\n

\u201cThis comparatively modest rise in values means Melbourne home values don\u2019t need to fall as far as other capitals before wiping out all of its Covid gains.\u201d<\/p>\n

\"Dwelling<\/p>\n

Source: CoreLogic.<\/strong><\/em><\/p>\n

At the other end of the spectrum, Adelaide\u2019s housing values surged through the growth phase and, since peaking in July, have held reasonably firm.<\/p>\n

\u201cThe market would need to drop by almost 31 per cent before values in the City of Churches returned to pre-pandemic levels,\u201d Mr Lawless said.<\/p>\n

Regional markets are also looking relatively secure from wiping out their Covid gains. The combined regionals index would need to see values fall a further 26.8 per cent before reaching March 2020 levels.<\/p>\n

Comparing the generations<\/strong><\/p>\n

New analysis published by the ABS uses three Censuses to explore what was different and also what is the same for Baby Boomers, Generation X and Millennials. The ABS analysis compares the generations in terms of living arrangements, study, qualifications, participation in the labour force, working conditions, income and housing.<\/p>\n

Duncan Young, General Manager, Census said, \u201cEvery dinner table in Australia has heard someone reflect on how things were different \u2018back in my day\u2019,\u201d as he outlined the features of each generational grouping.<\/p>\n

\u201cBaby Boomers were born in the aftermath of the second World War and were young adults through Australia\u2019s recession in the early 1990\u2019s.<\/p>\n

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\u201cIn contrast, Generation X were born during a time when birth rates were lower in the late sixties and seventies. They entered early adulthood as Facebook launched.<\/p>\n

\u201cMillennials were born in the eighties and nineties and experienced early adulthood as smartphones and tablets became household items.\u201d<\/p>\n

The challenge faced by Millennials trying to enter the property market is greater than that which confronted earlier generations, despite them having higher education levels and fewer with the financial burden of parenting.<\/p>\n

Millennials are the most qualified generation at 25\u201339 years of age with a greater proportion of Millennials having a non-school qualification\u2014a certificate, diploma, or degree\u2014than earlier generations. Over three quarters of Millennials (79 per cent) have a qualification compared with under two thirds of Generation X (64 per cent) and less than half of Baby Boomers (48 per cent).<\/p>\n

Higher education qualifications were more likely for Millennials with 40 per cent having a bachelor degree or higher, compared with almost 25 per cent of Generation X. Only 12 per cent of Baby Boomers had a degree at the same age.<\/p>\n

The ABS reported that participation in the labour force was similar for Millennials, Generation X and Baby Boomers, with around four in five employed or looking for work when they were 25\u201339 years old.<\/p>\n

Over half (53 per cent) of Millennials have never been married, compared with 26 per cent of Baby Boomers at the same age.<\/p>\n

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The most common living arrangements for Millennials is living in a couple household with no children (36 per cent), which is twice the rate of Generation X (18 per cent) when they were 25\u201339 years old. One in five Millennials (21 per cent) are living with a partner and children, compared to more than half of Baby Boomers (52 per cent) at the same age.<\/p>\n<\/div>\n<\/div>\n

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