Saving for a mortgage deposit is harder than ever before

PHOTO: Saving for a house deposit

EXPERT OBSERVER

When discussing housing affordability, older Australian tend to point to much higher interest rates in the past as being a challenge while for younger Australians, higher property values are seen as the biggest barrier to home ownership. The truth of the matter is it is much more nuanced than this, but on balance I would say it is much harder to break into the housing market now than it has been in the past but it is not due to much higher property values alone. Let’s take a look why.

Although dwelling values have reduced over recent years, housing is in most instances (much) more expensive than it has been in the past. While this is an important consideration it is not the be all and end all.

One of the commonly repeated memes is that interest rates were high in the early 1990s thus making buying a home difficult. What probably made buying a home more difficult at time was the fact that the unemployment rate reached as high as 11.2% compared to the 5.2% today however, once again it is a bit more nuanced than that. When unemployment peaked, the male workforce participation rate was 73.8% which is actually higher than it currently is (70.9%) while the female participation rate was 51.9% compared to the historic high of 61.1% it is currently.