Many assume millennials living in Sydney are either perennial renters, lured to the city’s inner-city suburbs, or overgrown children still living with their parents. However, new data paints a very different picture of where Sydneysiders aged 25 to 34 have chosen to live – and why.
Housing affordability plays a major role in where millennials choose to settle. Over the previous decade, suburbs in Sydney’s middle-ring saw the biggest surge in residents from this demographic cohort, according to census data. In particular, council areas like Strathfield, Cumberland, Burwood, Parramatta, and Ryde have all seen growth in the number of Gen Y residents.
In the municipality of Strathfield (which includes the suburbs of Strathfield and Homebush, and parts of Greenacre), 15.8% of residents were aged 25 to 34 in 2006. Ten years later, the number of residents from this demographic cohort has jumped to 23.1%.
While many millennials have chosen to delay or forgo homeownership, many cite attitudinal shifts to homeownership and lifestyle preferences for their choices.
“Home ownership isn’t the goal for everyone anymore,” said David Chen, a 27-year-old mortgage broker and rentvestor who rents in a sharehouse in the north-west Ryde suburb of Eastwood.
Even though Chen is a proud owner of two investment properties, he’s not particularly keen on buying a home to actually live in. “I don’t want to be tied down to one location by a home … I don’t want to be restricted in what I can do and where I can live,” he said.
As he’s a mortgage broker, Chen is aware that there’s a significant chunk of millennials with “a lot of savings, but without any property” who’re calling these middle-ring suburbs home.
“Thirty to forty years ago, people who were 27 would be settling down and having kids. Nowadays, people are single for longer and the need for home ownership is a bit different,” he said. “Eastwood is convenient … it’s near the city, near to where everyone [in the sharehouse] works, including Parramatta.”
In Eastwood, 17.6% of residents are aged 25 to 34, making them the largest demographic cohort in that suburb.
Recent surveys have shown that a significant proportion of millennials are in favour of rentvesting, an investment strategy which allows people to rent homes in desirable locations while investing in property with higher yields.
According to a recent survey by non-bank lender State Custodians Home Loans, about 26% of Gen Y respondents say rentvesting would enable them to live in high-quality rental homes (which would be out of their price range to buy), while raking in income from investment properties. Additionally, 32% of Gen Y respondents say it would be cheaper to rentvest than shoulder an owner-occupier mortgage, which would leave them with limited disposable income.
Millennials have different priorities compared to older generations, according to Joanna Pretty, general manager at State Custodians Home Loans.
“Young people are now settling down later in life and choosing to – or [being] forced to - rent for longer periods in order to save up enough money for an initial deposit,” Pretty said. “Or else they’re taking their time to consider their next move and focusing on other things like their career or travel, so they’re entering the market later. What’s more, for many the prospect of buying a place that may require some work, given people’s busy pace of life nowadays, isn’t so appealing.”