Two age groups, 18-24 and 25-34, along with those aged 35-39 are of particular importance to the housing market. Combined, the more general age bracket of 20-40, represents around 30% of the Australian population.
Together, Generation Z and Millennials are important for the housing market as they represent the bulk of future potential demand. Generation X (aged 27-42) generally have much higher rates of home ownership and are more likely to be second time and trade-up buyers.
It’s also notable that combined, Boomers and Gen Xers also represent a big share of home renovation activity. By doing so, Boomers and Gen Xers are further leveraging their current homes with the future potential of moving up the property ladder.
Whereas Millennials tend to stay in their current homes and renovate because it is more affordable than moving to a new home until they establish greater equity to help finance their future housing aspirations.
Planning on Leaving the Nest
Future households and hence a big percentage of property buyers, are going to come from today’s young adults in the 18-24 age bracket. It’s worthwhile to appreciate where and how they are currently living.
The answer may come as no surprise, most live at home with Mum and Dad!
Across Australia, 55% of this age bracket are living at home with their parents or a guardian. Why? Again, this is no surprise because they earn lower incomes. For many, their focus is more study, they are in start-up lower-paid positions, or in part-time employment. This trend is even higher in NSW where, because of higher rentals and housing costs, 60% live with Mum and Dad.
For those not living in the family home, what does living independently look like? For many, this usually means a shared-house, often because of economies of scale, in a 3 or 4-bedroom house.
A further 30% live in apartments, although in inner-city areas that proportion is likely to be much higher. However, in either case, the cost of living will be a major influence.
Another key fact for the housing market, and in particular for investors, is the point that just over two thirds of 18–24-year-olds living independently, are renters. Here again, affordability is driving demand and access to facilities is also important.
The Australian Housing and Urban Research Institute recently undertook the Australian Housing Aspirations survey. This noted for the 18-24 age group that their immediate housing aspirations centered around location, in particular being close to education and employment.
The survey also looked at the group’s long-term housing aspirations. Here the majority surveyed said they would like to purchase a 3-bedroom detached house. However, to secure this, future careers (and logically incomes) and relationships came first.
I think it’s also very interesting to debate how all this impacts on how we market to the group and how we establish longer-term engagement as future buyers.
The 25-34 age group
This group aligns with establishing a career, coupling up and maybe starting a family, and yes, purchasing a home.
However, this age group is less predictable. They are taking longer to establish themselves as the median age for marriage and having children drifts.
For example, the average age of mothers has been rising for both first-time mothers (from 27.9 years in 2009 to 29.4 years in 2019) and those who have given birth previously (from 31.0years in 2009 to 31.9 years in 2019).
Where are people aged 25-34 living in Australia? Over half of all these adults are living as a couple. Only 13% are still living with Mum and Dad and very few now continue to live in a group house or alone.
We see that people aged 25-34, both couples and lone parents, are mainly living in separate houses. However, those living alone or in group households, are more likely to be living in apartments. This is also a reflection of the overall greater supply and diversity of apartments.
Considering the impact on the property market, those living as a couple are also generally more likely to take on a mortgage, with the benefit of earning capacity of two people. Lone persons do take on a mortgage, however many choose to rent.
The same survey mentioned earlier found that for many aged 25-34, their short-term housing needs were seen as satisfactory. Although, few felt their longer-term aspirations were satisfied: that being home ownership.
However, a key and somewhat disappointing result were that almost 1 in 5 respondents felt that home ownership was now unattainable. The more optimistic in this age bracket were generally living as a couple and had university qualifications and possibly higher incomes.
Again, I think it’s very interesting to debate how these trends impact on how we market to this older age bracket at a time most aspire to buying their own home. While affordability is central, we could also consider what type of future supply is developed and how we message and engage this potentially buy-ready group. I think that post-Covid housing security and flexibility will be key motivations.