Australia's housing market is experiencing dynamic shifts, influenced by various factors including generational wealth, rental trends, and housing affordability. Homeownership, once viewed as the quintessential Australian dream, is becoming increasingly elusive for many. With rising prices and changing demographics, the housing crisis now affects not just young first-time buyers but also older renters, signaling the need for significant shifts in policy and market behaviors.
For decades, Baby Boomers, born between 1946 and 1964, have shaped the Australian economic and housing landscapes. They entered the housing market when property prices were relatively low, allowing many to become homeowners early. Their wealth, primarily built through property ownership, positions them as the wealthiest demographic, controlling over half of Australia’s $11 trillion housing market. This influence is set to dominate the market for years to come, especially as they begin to transfer their assets—estimated between $4.5 and $6 trillion—to the next generations.
While younger generations, particularly Millennials and Gen Z, face mounting challenges when trying to break onto the property ladder, experts indicate the transfer of wealth may only exacerbate disparities between those with familial support and those without. The conversation now turns to the rising cohort of renters, which is becoming increasingly diverse, including many older individuals who may never achieve homeownership.
Researchers from the Australian Housing and Urban Research Institute (AHURI) have noted this demographic shift. Their latest report indicates renting is on the rise across almost all age groups. "Australia is possibly at the flip-point where there are more renters than homeowners," says Professor Emma Baker from the University of Adelaide, co-author of the report.
With nearly 60% of current renters hopeful about owning homes eventually, many are now prioritizing stability over mere affordability. Renters are reportedly willing to pay more—for example, $127 weekly for improved housing quality, including good insulation and amenities—and around $72 extra for lease terms extending indefinitely contingent on good rental practices.
This growing demand for security drives policy changes, such as recent laws enacted by the Victorian and New South Wales governments, which aim to protect tenants from eviction and regulate rent increases. Notably, these changes reflect renters' desires for more control and choices, including the ability to have pets—a reflection of their wish for homes, not just houses.
Ironically, as the rental market evolves, so too does public perception. Once regarded as transitional, renting is now viewed as mainstream. "Renting now has a much more mainstream age profile, with elderly people increasingly likely to rent," states Baker, emphasizing the need for updated welfare policies to accommodate older Australians without assets.
Meanwhile, the auction house is alive with stories of extreme bidding wars, underscoring the housing affordability crisis—one characterized not just by climbing prices, but by the fierce competition among buyers. For example, recent bidding wars in Sydney saw homes sell at $1 million over expected prices, showcasing the desperation prevalent among buyers. A four-bedroom house listed at $1.9 million sold for $2.9 million after only 30 minutes of inspection. This exorbitant return bears testimony to how the market is buoyed by affluent buyers, often backed by family wealth.
With core urban areas increasingly out of reach for average income earners, outer suburbs are experiencing significant interest. CoreLogic data reveals how suburbs like Logan have witnessed median house prices doubling—from $288,692 to $640,628 over just five years—drawing interest from those wanting space at more reasonable prices. Even with these prices still well below Sydney’s, challenges for buyers remain, particularly with financing constraints imposed by rising interest rates.
Recent trends indicate families from Sydney seeking affordable living are migrating to Brisbane, where properties are still available within reach. "People are increasingly being incentivized to seek affordable homes, and those cheaper pockets are becoming hotspots," highlights Eliza Owen, head of research at CoreLogic. With remote work normalizing daily commutes, cities like Brisbane are appearing more attractive for potential buyers.
Though the story of Australia’s housing market primarily revolves around affordability and accessibility, the conditions are ripe for continued price escalation. Regions with limited housing supplies, particularly Queensland and New South Wales, are expected to see prices rise as demand outstrips supply. Despite the larger economic pressures. Diana Mousina, AMP's deputy chief economist, suggests, "States with high undersupply need to ramp up construction."
At the same time, Victorian suburbs are increasingly affordable compared to their northern counterparts. New residents are drawn by lower prices still obtainable within the market. Significant measures have been taken to reform the housing market, but so far, reactions from the government have been varied—some pushing for more subsidies, others seeking early access to superannuation for first-home buyers.
Efforts to reshape the rental property sector through new legislation are important but also primarily revolve around immediate needs. Advocates argue for flexible response strategies to continuously adapt housing policies to the shifting rental demographics.
With the growth of the secondary rental market—the likes of Airbnb—putting pressure on long-term rentals, the market remains unpredictable. Rental prices, which depend on available stock and market demand, suggest the current shift may sustain price increases well beyond current predictions.
Overall, the Australian housing market's dynamics are complex and continuously shifting. With various players influencing the equation—from Baby Boomers controlling wealth to younger generations struggling with affordability—the interpretation of housing as the backbone of Australia’s culture continues to evolve. How these shifts will manifest remains to be seen, but one thing is clear: the search for home is finally transforming to encompass diverse needs across generations.
