SYDNEY • As she prepares for her wedding at the end of the year, Sydney resident Sarah Hemans admits she and her husband-to-be will face a grim reality: the battle to enter Australia's property market.
Ms Hemans, a 22-year-old university student, and her 24-year-old fiance are living in their respective parents' homes on opposite sides of the sprawling city, a situation that makes the logistics of their relationship complicated but allows them to avoid hefty rents.
The couple have discussed their future but, according to Ms Hemans, neither of them believe they will ever be able to afford a house in their home town.
Instead, they are considering moving to the state of Queensland or to Melbourne in Victoria state, where property is expensive but less so than in Sydney.
"I don't want to leave but I feel like I have no choice," she told The Straits Times.
"I love Sydney and I grew up here. We are forced to choose between the affordability of buying a house and living where we grew up, where our support networks are."
Ms Hemans is part of a generation that has been all but locked out of a booming property market that has left Australia's two biggest cities - Sydney and Melbourne, with fast-growing populations of 4.9 million and 4.5 million respectively - among the most unaffordable in the world.
For decades, the so-called "Australian dream" has centred on buying a family house.
But many younger Australians no longer see the dream as achievable and have rejected it as something of a far-fetched fantasy.
For the first time, young people are going to be less well off than their parents... It poses questions for young people about what it means to have a family when they can't afford their house. We are not blaming the baby boomers. It is about how the government acts. We need to see some action.
MS JACQUI MCKENZIE, policy manager of Youth Action, on how higher house prices are forcing people to rent for longer and pushing young people to the margins of the community.
About 70 per cent of Australians own their own homes, but the proportion of first-time home buyers entering the market has dropped from more than 20 per cent two decades ago to about 13 per cent in 2014.
Last year, average Sydney home prices increased by 14 per cent to about A$1 million (S$1.03 million), about five times the prices 20 years ago. Average prices across the country rose 9 per cent last year to about A$660,000, more than four times the prices 20 years ago.
The two-decade boom began as interest rates started to drop in the mid-1990s and has been heightened in recent years by record-low interest rates and, in some suburbs, an influx of buyers from abroad, especially China.
The rising populations of Australia's bigger cities and strong demand for suburbs close to business districts have also added to the boom.
Despite signs of possible cooling in recent months as banks tightened their lending practices, the soaring prices have been a boon for existing home owners and those who have been able to invest.
FADING HOME OWNERSHIP DREAM
But the boom has opened up a social chasm and left a younger generation increasingly squeezed out of the market.
Ms Eliza Kidd, a 22-year-old living in a rental house in Sydney, said: "Most people from my generation, in my crowd, would not consider buying a house as a dream goal. In past generations that was the aspiration. My parents bought their house a long time ago when prices weren't so crazy."
The housing boom has changed the way many younger Australians live. It has forced them to live in their parents' homes for longer and to consider either buying a property far from where they grew up or not buying at all.
Some have reined in spending on holidays and big nights out or have opted to live in small cramped rentals to try to start saving for mortgages.
Ms Kidd lives in the inner-city suburb of Annandale, one of three tenants who have squeezed into a two-bedroom house to make their rent affordable.
She works three to four nights a week as a bartender on top of her university studies and is struggling to pay her A$180 weekly rent and her bills.
She does not believe she can buy a property for at least 10 years.
"The idea of buying a home is so far out of my reach," she said.
"Even when I am older and have a full-time job, I don't see it as a priority.
"Everyone I know is renting for their whole lives, because it is so crazy to get into the market."
The average age of first-time home buyers in Sydney has increased from 25 in 1985 to 32 last year. In 1985, the average house cost 3.4 times the average annual income. It is now about 12 times the average income.
This growing generational divide has led to a push for policymakers to introduce changes to cool the market and to assist first-time home buyers.
States provide some concessions to first-time home buyers, such as grants and exemptions from transfer taxes. These vary by state and are restricted in some states to purchases of newly built homes.
Analysts believe housing affordability for first-time home buyers is shaping up to be a significant issue at the coming election, likely to be on July 2.
Australian Prime Minister Malcolm Turnbull has ruled out changes to tax concessions for property investors - those who buy houses to rent out or resell - ahead of the election. The government has insisted that the changes would drive down home prices, dismissing claims that the main beneficiaries of the concessions are the wealthy.
The Labor opposition wants to limit negative gearing, or tax deductions for interest on loans used to buy investment properties, if the interest exceeds rental income, to newly built houses only from next year.
"What Labor is proposing is a huge, reckless shock to the market," Mr Turnbull said on April 24.
"This is no fine-tuning. This is a sledgehammer they are taking to the property market."
Other proposals include calls by commentators and lobby groups to rezone more land for housing, limit foreign investment in residential properties and to add incentives for property developers to invest in construction of affordable housing.
CALL FOR CHANGE
Increasingly, the younger generation are becoming more organised and are also raising their collective voices.
Youth Action, an organisation which represents young people's issues in the state of New South Wales, has been calling for changes to the tax concessions for property investors, as well as measures to ensure that renters are not subject to sudden rent hikes or terminations.
The organisation's policy manager, Ms Jacqui McKenzie, told The Straits Times that higher house prices are forcing people to rent for longer and "pushing young people to the margins of the community".
"For the first time, young people are going to be less well off than their parents," she said.
"It poses questions for young people about what it means to have a family when they can't afford their house. We are not blaming the baby boomers.
"It is about how the government acts. We need to see some action."
In the new book Generation Less: How Australia Is Cheating The Young, 29-year-old author Jennifer Rayner warns that Australia risks turning its young into "second-class citizens".
She says governments need not only to try to make housing more affordable, but also to improve job security and wages.
"We're beginning to see young and old pull apart in ways that will wear out our communal bonds," she writes.
"I see my generation becoming the first in more than 80 years to go backwards in work, wealth and well-being."
Perhaps the best hope for those without homes is that the market in Sydney, which some officials have admitted may be in a "bubble", will eventually burst.
Some analysts say the market is overheated but is more likely to slowly ease than to collapse.
AMP Capital chief economist Shane Oliver said he thought the chances of a full-blown crash with price drops of 40 to 50 per cent were about 20 per cent.
"To get anything like that, you'd have to have either much higher interest rates, a recession in the economy or a massive oversupply problem," he told news.com.au.
"This issue is more of a social one. People are having to borrow exorbitant amounts of money to buy a home and affordability is horrible."
Dr Oliver added: "It's screening out an entire generation of people from the property market, and some of them are hoping there will be a crash because they feel they've been disenfranchised."
In the meantime, short of a collapse, for many members of the younger home-deprived generation, the Australian dream will remain just that - a dream.
"I don't imagine ever being able to afford in Sydney," said Ms Gabi Bowen, a 23-year-old university student. "Maybe it was more the norm for my parents. It was much easier for them."
A version of this article appeared in the print edition of The Straits Times on April 30, 2016, with the headline 'For young Australians, owning a dream home is just a dream'. Print Edition | Subscribe
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