The sad, slightly morbid truth about homeownership (or lack thereof) is that parents are living longer—and their greater longevity is preventing their children from affording homes. 

A new report by KPMG—entitled Housing Affordability: What can be done about the Great Australian Dream?—discusses the demographic influences on Australia’s ever-decreasing homeownership levels. The report suggest that the older generations’ prolonged life expectancy is partially preventing younger generations from buying homes because intergenerational wealth, or inheritance, isn’t being passed down until much later in life.

“With improvements in health outcomes, which is enabling individuals to live longer, that intergenerational access to housing wealth is being delayed, and potentially eroded,” stated the report.

“In the context of housing affordability, family wealth which has traditionally been inherited by successive generations and is often utilised for investing in dwellings, is therefore not being accessed by current generations as readily.” 

According to KPMG analysis, Baby Boomers (those born between 1946 and 1964) received their inheritance from their parents at the age of 40, on average. Generation X (those born between 1965 and 1979) and Generation Y (those born between 1980 and 1995), however, aren’t receiving their inheritance from their Baby Boomer parents until they’re 57 years and 54 years of age, on average. This is because life expectancy has increased by close to 10% for Baby Boomers.     

Brendan Rynne, KMPG chief economist and author of the report, noted that the children of Baby Boomers will not receive their inheritance until they reach the age of 57, “which is virtually the end of their working life.”

“While the inheritance might be beneficial for their retirement and it might help them pay their mortgage off — if they still have a mortgage — it hasn’t helped them through the earlier parts of their life,” Rynne said.

And it’s affording homes during the earlier parts of life which is proving toughest for first-home buyers. While interest rates are at record lows, stagnating incomes, the need for large deposits, and rising house prices are making it difficult for Generation Y to make it onto the property ladder.

“This point is particularly relevant for people who need to save for a deposit to purchase a property. If house prices are growing more rapidly than wages, then a potential purchaser’s ability to save the minimum deposit — which is expressed as a percentage of the house prices — becomes harder and harder. So access to intergenerational family wealth becomes more important in these circumstances,” the report stated.

In response, members of Generation Y are changing their home purchasing strategies, with many using new methods that were unknown to previous generations. “Some young people are now collaborating to buy, some are assisted by parents, while others are simply choosing not to buy because they don’t want to be committed to a location for 30 years of a mortgage.”