Home prices in many parts of Australia have stopped rising and interest rates are at an all-time low, yet it seems that millennials are not rushing in to buy their first property.
According to Robert Gottliebsen, Business Spectator columnist at The Australian, one of the reasons why first home buyers are not buying properties is their salary. Aside from not rising, many salaries outside public service are even falling. Hence, young people are afraid of incurring debt in spite of the low interest rates.
"This social change will almost certainly result in a lower birthrate and when the current generation reaches retirement, they will have no dwelling," he said. "They will either have to accept a lower standard of living than most pensioners currently receive or the community faces a much bigger cost."
Gottliebsen proposes two solutions to change the falling home ownership rate. One of them is allowing superannuation funds to be used to help young people gain a deposit. Another solution is to make the planning process a lot simpler in order to reduce the costs of a dwelling.
"This could be done by providing more land in outer suburbs and, perhaps more importantly, simplifying the inner capacity planning processes, particularly in Sydney, where delays can be two years or more. These delays boost cost," he said.
Reducing costs is also important since there is a 50 per cent fall in Chinese buying in recent weeks in Sydney.
"If the Asian buyers retreat and the locals don't replace them, we are going to go through a tough time," Gottliebsen concluded.
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