In conclusion, there are a variety of reasons why millennials are opting to rent instead of buy their own homes, and with current trends in housing prices and wages, it’s hard to blame them.
Home ownership among young people is at a record low, and the proportion of millennials renting homes instead of buying them is growing. While many people see this as a good thing, especially in today’s housing markets, others consider it the demise of the Great Australian Dream. In fact, the 2016 Census reveals that the number of people who own their homes is on a steady decline.
Baxton Property Management CEO Kellee Pennicott says, “we understand that today’s unique market environment can be a challenge to overcome, especially for first-time renters. But to overcome such challenges, it’s vital to first understand the underlying reasons behind them.” Here is an overview of why millennials are choosing to rent their homes instead of buying them.
A Millennial Trend
It turns out that 40% of Australians aged between 25 and 34 are renters, a trend that isn’t limited to Australia alone.
The United States, for instance, has seen millennial home ownership rates at just 34.1%, a record low and about a fifth below Baby Boomer rates. This is especially striking since the US home ownership rate is at 62.9%, and millennials make up the largest and most educated age group entering the housing market.
Other countries experiencing the same trends include Canada, Malaysia, and the UK, where it is estimated that a quarter of all households will be renting by 2021. Perhaps the only country experiencing the exact opposite phenomenon is China. The BBC revealed that 70% of millennials in the country have already bought their own homes. They outpaced Mexican millennial homeowners by 24 percentage points, and tend to get help from their parents who see these homes as an investment.
There are many reasons why millennials in Australia and across the globe are renting, and these are strongly related to the unique set of circumstances the youth face today.
A recent blog post on the Baxton website stated that one of the biggest reasons is because of the stress from student loans. This suggests that the flexibility of the lifestyle that comes along with renting is one major factor of the rising millennial renter rates.
Of course, this doesn’t mean that millennials don’t want to own their own homes down the line. Many of them just can’t afford a property at the moment. Other studies indicate the rising housing prices as a main contributor to the rise of renters, with economist Chris Richardson saying that rental rates make much more sense than house prices. In fact, 87% of non-homeowner millennials are concerned about the costs of buying their own property, with many raising concerns over property price increases being disproportional to wage growth.
In addition, millennials are delaying marriage for longer. There’s a notion that investing in their own property just doesn’t make sense when they’re not planning on starting a family any time soon.
“That’s why Baxton Property Management in Hobart, does its best to make finding your next home as easy as possible by connecting owners and tenants online via our website and social platforms such as Facebook, Google+, Twitter, Instagram, LinkedIn and even Pinterest” Pennicott stated.
Maximising online initiatives has resulted in unprecedented growth to a point where we simply do not have enough rental stock in the suburbs of Hobart, West Hobart, South Hobart, North Hobart, New Town, Moonah, Glenorchy, Sandy Bay, Dynnyrne, Tolmans Hill, Kingston, Kingston Beach, Tinderbox, Blackmans Bay, Taroona, Lindisfarne, Howrah, and Sorrel in Tasmania and across the Sunshine Coast in Queensland, Pennicott said. When demand outstrips supply the outcome is upward pressure on rental prices. “This is a great outcome for our property owners who are enjoying fully maximised investments with premium returns and no vacancies.”
A Case Of Markets
So how does Australia’s rental market fare compared to others around the world? In addition to the rise of millennial renters in Australia, the country’s tax arrangements distort the market and increase competition for limited supply. However, the shortage isn’t too dire to make buying a house more attractive. This situation is mirrored in places like Paris, Dublin, and Abu Dhabi.
In contrast, Discover Homes Miami cites the wide range of choices and large investments as a factor in meeting high demand and keeping Miami’s rental markets booming. On the other hand, London has seen rent falling after uncertainties over Brexit and imposition of new tax laws.