AFTER securing a steady job as a high school teacher in Sydney, Ms Amy Satchell decided she was ready to finally stop renting a house and buy a place she could call home.
But she quickly found that the so-called Australian dream was far beyond her reach.
Six weeks ago, Ms Satchell, 28, who has been teaching for two years, went to see a mortgage broker to discuss her prospects of entering the surging Australian property market.
Like an increasing number of young Australians, she discovered that she has little chance of affording a home - or, at least, a home that would not send her to the outskirts of Sydney and put her beyond the reach of her job, friends and family.
"It's an enormous problem for me," she told The Straits Times. "Unless you have someone to support you or give you money, it is impossible to be able to afford anywhere that is going to be reasonable to live."
Ms Satchell has rented since she was 21 and now pays A$270 (S$310) a week for a bedroom in a two-bedroom flat she shares with a fellow renter in Erskineville, a suburb about 3km from Sydney's centre. With her public school teaching salary of about A$65,000 annually, she believes it would take her years to afford a modest two-bedroom flat, which she says would cost from A$470,000 to A$650,000 and would be farther from the city than her current home.
"All of my friends are renting - not one of my friends from school has bought," she said.
"It is not just the money I am throwing away each week on rent. It is also about the mental health of being able to do up your own property."
Australia has long considered itself a home-owning nation. But it is fast becoming a nation of renters as a seemingly endless property boom forces younger buyers out of the market.
First-home buyers now account for just 12.5 per cent of purchases - the lowest on record. In New South Wales, the figure is just 6.8 per cent, down from 34 per cent in 2009.
Meanwhile, there has been a surge of buying by international investors and local retirees, who have taken advantage of low interest rates and have been using their retirement funds to purchase investment properties.
The boom has seen average home prices rise to 4.5 times the average income, up from 2.5 times in 1985.
Increasingly, said economist Chris Richardson, younger Australians are opting to rent or stay at home after being squeezed out of the market.
"We are shifting away towards being a society of renters," Mr Richardson, from Deloitte Access Economics, told The Straits Times.
"When prices go up, the share of new home buyers goes down. Housing prices are not a bubble but they are strong - 22 years without a recession will do that."
The affordability problem has led to calls for state and federal governments to intervene and provide more incentives for first-home buyers. The calls echo a similar push internationally, with Britain recently introducing a loan scheme that allows buyers to get a mortgage with only a 5 per cent deposit.
Most states in Australia offer generous cash grants to first-home buyers of A$7,000 to A$10,000, but the authorities have been winding them back to limit them to purchases of new homes only. Other support includes tax breaks and A$4,000 boosts to bank accounts for people saving to buy a first home.
A property writer, Mr Jonathan Chancellor, said he believed properties were affordable but that states had erred by restricting the grants to new homes.
"FHBs (first-home buyers) aren't being priced out of the market by unaffordability or property investors, just the result of highly foreseeable state government meddling," he wrote on the Property Observer website.
But Mr Richardson said that schemes to support first-home buyers "don't really help much". Instead, he said, local and state governments should release more land for property development and reduce taxes and charges for developers.
Most economists believe one of the biggest problems is the federal government's generous tax breaks for investment property owners.
Taxes on property gains are significantly lower than income tax rates, while many investors can also claim tax deductions for the interest on their mortgages as well as for expenses such as maintenance.
But it seems unthinkable that any government would dare to change the tax regime and risk the ire of more than a million voters who own more than one property.
Ms Satchell, for instance, notes that her parents own an investment property. While the investment surge is making life tougher, she said, she hopes her parents' investment pays off.
"If I bought, my parents would probably help me out a bit," she said. "But I would still be left with a really huge mortgage."
This story was first published in The Straits Times on Nov 26, 2013
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