Twenty per cent more 25 - 34 year olds were shacked up at home on the night of the 2016 Census compared to five years ago, indicating that hipsters are fast becoming a generation that stay in the nest.
For those wondering why there’s been such a steep rise in the number of non-dependants living with their parents, Mozo’s Property Expert Steve Jovcevski suspects that the housing boom has a lot to do with it.
“Whether you want call them “kidults”, “millennials” or “hipsters”, I’d place my bets on young people in their 20s and 30s choosing to live in the family home for financial reasons,” he said.
“House prices are simply not what they used to be in Sydney and Melbourne, making it harder for young people to grow their careers in those cities as renters, while at the same time saving for a first home.”
According to Mozo Data, the average home loan interest rate for owner occupiers back in 2011 was 7.26%, while fast forward to 2016 and the average rate was 4.51%.
However, Jovcevski said that even though interest rates used to be higher, property prices were considerably cheaper back then compared to now, so saving up for a deposit was more achievable.
The median price for a house in Sydney in February 2011 was $637,258*, compared with $780,000** in August, 2016 (the same month as when the Census took place).
If you were looking to put down a 10% deposit on a first home loan back in 2011, you’d only need to save $63,725. Five years later borrowers would have to cough up $78,000, that’s $14,247 more.
On the plus side, new and improved first home owner grants and concessions including the abolition of stamp duty for eligible applicants and the first home super saver scheme are set to kick in on July 1, which could help to turn the stay in the nest trend around.
“While these incentives may improve housing affordability in the short term, I urge Aussies with deposits saved up to act sooner rather than later before a flood of buyers enter the market and push prices up even further” Jovcevski warned.
The 2016 Census data also revealed that home ownership rates are dropping. 25 years ago, 41% of households owned their homes outright, while in 2016 only 31% of households did.
“Many borrowers continue to pay a premium on their mortgage by banking with the Big 4” noted Jovceski. “Every percentage point difference you can get by going with a smaller lender is going to help you pay off your mortgage sooner.”
If you’re in the market for a first home loan, use Mozo’s comparison hub to shop around for the best rates and features across hundreds of mortgages in the market.
*According to Domain
**Figure reported in Business Insider