Young people to rent for life

Bad moon rising with Generation Landlord

People wonder why I want to help people get work. The lack of intergenerational transfer of monies is one reason. Unless you’ve got a rich mum and dad, you are behind the eight ball when it comes to housing affordability.

I’ve edited this article from Gareth Hutchens from the ABC, who has his finger well and really on the pulse.

“When younger people say it’s impossible to save for a house deposit these days, they’re not lying. According to researchers, the budgeting strategies younger generations use to try to save for a deposit are “increasingly insignificant” in modern Australia.

They say house prices are rising too quickly, and the proliferation of precarious forms of employment since the 1980s, and stagnation in wages for younger workers, mean many younger Australians are facing the prospect of being locked-out of home ownership altogether.

They say the sharp decline in home ownership among younger people is not a result of them being work-shy, or because they’ve forgotten how to save and make sacrifices.

When you read press releases from the Hawke-Keating Labor governments of the 1980s and early 1990s, it’s impossible to miss the “narrative” they were promoting. They talked about the new and exciting Australia of the future, where workers would be highly skilled and living standards and wages would rise on the back of surging productivity and export competitiveness.

The old post-war Australia, they said, where it was common for people to leave school after year 10 and join the workforce, was not going to cut it in the modern globalised economy.

That old economy Mr Keating was talking about, where a large number of young people joined the full-time workforce out of school in the 1950s and 1960s, was obviously radically different from today’s economy.

But in that post-war era, Australia’s social welfare model relied on widespread home ownership and housing was more affordable for unskilled workers.

Since 2001, the national ratio of median house price to median income has almost doubled to 8.5, and the time required for the accumulation of a deposit for a typical property has increased from six years median earnings in 1994 to 14 years currently.

In the story Australians were told in the 1980s and 1990s about the need to have a more flexible and productive workforce, the future significant decline of home ownership among younger workers, and what that would mean for this country’s post-war social compact, was not really part of the vision.

The emergence of Generation Landlord has been partly fuelled by the growing financialisation of housing, reflected in the large increase in investors owning multiple properties in recent decades. During the past 30 years, which has seen landlordism promoted as a welfare strategy for the market-thinking, self-responsible, investment-ready individual.

Mum and Dad investors are valorised politically as enterprising, self-reliant, and providing essential housing for others, but who, upon closer inspection, are predominantly middle-aged and older, wealthier and higher-income.

The tension between Generation Rent and Generation Landlord is compounded by the shift in employment arrangements in Australia that has undermined the ability of younger workers to earn and save a 20 per cent deposit.

The re-emergence of flexible or non-standard work practices has crystallised the concept of the precariat, which is characterised by economic insecurity.

The traditional pathway to home ownership simply doesn’t exist for a huge number of young Australians these days. Which begs the question: where does Australia’s self-image of egalitarianism sit in all of this?

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