The reason millennials aren’t able to buy a home: They waste money on rent to live close to work 

Millennials around Australia are struggling to purchase their first home as they waste money on hefty lifestyle choices.

While younger generations believe the housing prices to be out of their league, new evidence from an Australian Institute of Health and Welfare (AIHW) report suggests that they’re willing to pay expensive rent – without the ownership reward.

The report reveals that over the past two decades there has been an increase in renting and a decline in home ownership.

AIHW suggested that social factors are influencing the economic constraints of younger generations in their quest to buy their first homes. 

A desire to travel and enjoy a lifestyle closer to booming city centres and work are some factors that could lead millennials to fork out an expensive amount of rent – limiting purchasing capabilities. 

Australian Institute of Health and Welfare (AIHW) report has suggested that millennials place importance on lifestyle choices which is limiting their purchasing capabilities. Pictured: houses in Sydney’s luxurious and expensive Watsons Bay 

‘Australia is experiencing generational change when it comes to home ownership, with younger households being affected by factors such as economic constraints, lifestyle choices and work-home preferences … therefore limiting their ability to become homeowners,’ it states. 

Private renting has risen from 18.4 per cent to 25.3 per cent over the past two decades.

In a seesaw relationship, households who own their home have dropped from 71.4 per cent to 67.5 per cent during the same timeline. 

However, new data from Westpac Life suggests that the bank’s 25-34 year olds have a consistent goal of saving for property. They save ten times more money for the dream of home ownership than for holidays or travel, news.com.au reported.

Westpac’s Head of Savings, Kathryn Carpenter said the research represented a myth about the lifestyle choices of millennials as the conversation should move beyond smashed avo on toast and travel.  

The report reveals that private renting has risen from 18.4 per cent to 25.3 per cent over the past two decades, suggesting that millennials would prefer to spend more money to live closer to work 

The report reveals that private renting has risen from 18.4 per cent to 25.3 per cent over the past two decades, suggesting that millennials would prefer to spend more money to live closer to work 

‘Millennials are often depicted as a generation more focused on life experiences and living in the ‘now’,’ she said.

‘However, our research shows that many are in fact taking saving for a home deposit seriously and prioritising it above other goals including travel or lifestyle.’

The Westpac Life savings account allows customers flexibility to save towards specific goals as it’s specifically designed for millennials who wish to balance their short and long term goals, Carpenter said.

Kathryn Carpenter, Westpac's Head of Savings, said that research from their data indicated that millennials focused on smashed avo on toast (pictured) and travels is a myth as many have goals to save for their first home

Kathryn Carpenter, Westpac’s Head of Savings, said that research from their data indicated that millennials focused on smashed avo on toast (pictured) and travels is a myth as many have goals to save for their first home

It’s also difficult to compare the costs of travel and housing deposits over the past 40 years as the two have shifted and will continue to do so.

In 1981, the 20 per cent deposit was $60,809 for median-priced house in Sydney. A flight to London, however, would have cost over $9,000 in today’s value.

The AIHW report says that home ownership is still the most common tenure type in Australia, despite the increases in price and difficulties facing millennials.

It acknowledges that Sydney is the most expensive city and has seen the steepest price rises – particularly over the last five years. 

In December 2017, the median house price in Sydney was $980,000, almost three times the amount of Australia’s lowest medium price, $390,000 in Hobart. 

The report acknowledges that Sydney is the most expensive city in Australia and has seen the steepest price rises - particularly over the last five years

The report acknowledges that Sydney is the most expensive city in Australia and has seen the steepest price rises – particularly over the last five years

 



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