Affordable housing solutions for Gen Z—will they be able to afford a home in Australia?

As generations evolve, it's getting harder to find affordable housing solutions in Australia's housing market. Read to find out more.

The trajectory of Australia’s housing market has often been characterised by booming prices and shrinking affordability, presenting daunting challenges for Gen Z. Affordable housing solutions are becoming critical, as echoed in a conversation between Nir Davidson and Lucinda Hartley, "It's pretty overwhelming and anxiety producing, particularly for young people watching that market feel like it's getting further and further out of reach." This stark reality is exacerbated by declining homeownership rates among younger generations compared to their predecessors. “We've seen that two thirds of baby boomers own their homes, similar to Gen X at 62%. But for Millennials, that's just over half with 55%, Millennials being 25 to 42 years old. And then if we look at Gen Z people born after 1996, it drops off even further. And the reality for many young people feeling like they may never own their home is pretty shocking.”

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Examining current market trends

Australia is experiencing the worst housing affordability on record (PropTrak). Even with a recent interest rate drop, four years of consecutive interest rate rises and home price growth are pushing the dream of home ownership even further out of reach. Even for entry level homes, all capital cities except for Darwin are now in mortgage stress, according to recent research on entry level homes by Domain Insights.

House prices are expected to continue to rise between 3.3-6% this year as a national average, with double digit growth expected in key growth markets including Perth and Brisbane.

So where does this leave the next generation of home buyers?

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The unique challenges facing Gen Z

For Generation Z (born 1996-2012) the dream of homeownership is increasingly clouded by unaffordable property prices and a relentless rental market. The discrepancy between rising living costs and stagnant wages creates a nearly insurmountable barrier. “Rent 49 months straight is going up, the ratio is just so out of proportion at the moment", Nir Davidson points out.

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Only 5% of Gen Z currently own property, which may not be surprising because this generation are under age 25, however by comparison a much higher proportion of older generations owned property at the same age. Over half (55 per cent) of Millennials, 25–39 year olds, are homeowners compared with 62 percent of Generation X and two thirds (66 per cent) of Baby Boomers when they were the same age (ABS)

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Innovation and alternative financing solutions

Innovative financial products are vital for providing affordable housing solutions to those sidelined in the current market. It’s a sensitive issue for Aussies, seeing that the dream of owning a home gets more out of reach. Now, there’s a new approach to home ownership , with 0% deposit shared equity home loans that make it easier to get onto the property ladder.

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Heading towards the future

While the road to homeownership remains complex, companies like Mondus are crucial in reshaping the approach to buying a home, ensuring that the dream of homeownership adapts rather than diminishes. As the market evolves, staying informed and proactive in exploring new and supportive financing options will be key for young Australians aiming to secure their own home.

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