The concept of buying a home has become somewhat of a pipe dream for most young Australians. Average house prices are increasing throughout metropolitan areas and the foreseeable strain of dealing with a mortgage is creating more of a demand for rental properties.
In fact, in the two decades, private rentals have increased from 23 to 28 percent and the average rate of individuals in their 20s owning a home are decreasing. As a result, we are seeing either an increasing number of parents going guarantor on a lot of home loans for their children, or renting out their own investment properties to family members.
Furthermore, between 2013 and 2016, only 10 percent of Melbournian renters were planning to buy a home in the foreseeable future. This was a surprising decrease from the 13.6 percent between 2001 and 2004.
While the average rate of unemployment is one of the factors to cause this decrease of buyer interest among the younger generation, this is a result of limited job opportunities. With a larger demographic pool of university graduates ready, willing, and able for the workforce, there is less demand than what there was a few decades ago. Coupled with narrow eligibility criteria, more selection processes and a higher benchmarks to meet, many young individuals simply cannot afford anything more than a rental without a stable income.
In addition to this, according to Property Valuers Melbourne, the main reason behind the preferability of renting over buying a home is usually higher increase rates and higher average house prices.
Location is everything
Densely populated areas close to the CBD or that are near public transport and shopping amenities have an increased property value. With an increased availability of public amenities, hospitals, recreational facilities and schools, there is a higher demand for property.
While young Australians are likely able to afford a home in regional areas, because there are more job opportunities in metropolitan areas, renting is a more cost effective option. Alternatively, many individuals are choosing to live at home and are reluctant to move out of home as a way of building their savings.
For more property advice and expert valuation services, contact Melbourne Property Valuers for quality assurance and a professional report.