I’ve Got No Interest in Homeownership
Can you people today realisticly join the housing market? What are the challenges we’re facing and how can we overcome them?
Firstly, I would like to acknowledge the significance and cultural meaning of the ‘Australian Dream’ of homeownership on stolen land. The ‘Pay the Rent’ movement is a reminder that homeownership in Australia is a colonial construction, and there is no equitable exchange of real estate on stolen land.
As a young student, “future planning” often doesn’t stretch much farther than my weekly budget. Any dreams of careers, financial stability, or building a family no longer ring true to a generation beset by uncertainty. Many find it tough to budget for the ‘Australian Dream’ when living on Centrelink payments: this statement in itself constructs a limited stereotype, excluding the variety of experiences young Australians encounter in trying to sustain the house as an intergenerational symbol of success and security.
Historically, the Australian Dream hasn’t represented practicality and security but political power, economic regulation, and symbolic meaning. Homeownership was meaningful before the 1850s when voting eligibility was still based on property rights, and before the 1980s when housing markets were still geared towards owner-occupiers. Homeownership was meaningful every time we used it as a selling point for immigration, inviting families to establish themselves soundly within communities, particularly in the 1960s and 1970s.
But the meaning of housing has changed. Houses can represent good financial management, to the extent that complaining about paying off a mortgage carries positive connotations: it is one of the few “positive debts” in Australian culture. Homeownership can represent control, and is symbolic of commitment to a place and a community
So why are young people not buying houses?
The simplest, most guilt-free answer is that these symbols are luxuries that can be engaged with through other means. Fiscal responsibility does not have to be demonstrated through debt. A sense of control over one’s environment and a sense of belonging in a community can be substituted with a retreat to carefully curated online environment: these substitutes are not necessarily healthier or more stable, but they are significant in proving that aspects of Australian Dream can be addressed through different and inexpensive means.
What was that about budgeting?
Even if we select the cheapest options, forgo haircuts and clothes, use our parents’ phone plan, eat ramen at home in the dark, and use public transport to get to Flinders from your share home way out in the suburbs, we can’t escape the cost of living. Despite all these budget hacks, cost of living calculators estimate you would still run up a bill of $241 per week to live in Adelaide. It is important to note that this excludes any extra necessities like textbooks for university, health costs, or the costs of social activities.
People who are miserable are bad with money. Calls for self-care and “treat yo’self” culture are fantastic ways to support your mental health when you need a pick me up, but can’t be sustained daily. Spending money can deliver a kick of serotonin but after about five minutes, increased financial anxieties kick in to the point that a vicious consumerist cycle develops. It is important to note that this is not simply an abysmal lack of self-control, but a level of social programming that feeds on the anxieties of a generation who grew up with uncertainty and insecurity on financial and social levels.
What does homeownership cost?
The median house price in Adelaide is $630k, with units going at $426,700. Housing prices are generally rising faster than wages, but I am going to assume they are stable just to demonstrate proof of concept.
I used a mortgage calculator to determine what the median income earner in Adelaide could borrow. At an interest rate of 5% over 25 years, with monthly expenses at the aforementioned minimum of $241 per week, I would be eligible to borrow $371,607, with a monthly repayment of $2,172.
Let’s break that down. If I lived on my own and minimised my living expenses as much as possible, I would be spending $12,532 on myself per year. This leaves me with $43,764 in savings per year. The mortgage calculator would leave me $55,093 short of the median unit price of $426,000, meaning I would have to save up for a little over a year to make the down payment. After that, I could repay my mortgage in payments of $2,172 per month, totaling $26,068. This is only half of my yearly savings, so theoretically I should be able to afford a mortgage on a unit all to myself. This is if no emergencies happen, if I am single living with no friends, family, health issues, debt, or other loans to repay, and if I wanted to make a 25 year long financial commitment.
But let’s say I have a full time study load. I earn $20 an hour in a retail position and they roster me on for 24 hours a week. That’s $480 a week, or $24,960 a year. At this pay rate, I would only be eligible to take out a mortgage of up to $118,151 at 5% over 25 years. This means a monthly repayment of $690 (or $159 a week), for 25 years, after which point I still won’t have enough for a unit apartment.
So how do I get myself the median salary?
In actuality, the cost of living can be bleaker. Most universities in Adelaide advertise the cost of living to be more affordable than other Australian cities, but this framing of the issue as comparative rather than the absolute measure which is misleading at best. The average household expenditure on rent in Adelaide is 25%, and if you spend more than 30% of your income on housing, you are under housing stress according to the Rental Affordability Index. If you can stay at home rent-free until you are able to afford a mortgage, then that can be of great help. But some of the issue lies in the fact that the Adelaide housing market is weighed down by homelessness and overcrowding that results from people who can’t just cut down on their expenses. Adelaide’s unemployment rate was 6.61% in December 2018. Are we happy for 6.61% of our population to wrestle with the bureaucracy of Centrelink, only to earn $26 less than they need in order to live miserably? Are we happy to squeeze 8 students into a studio flat so they can save an extra $40 per week? What do we actually gain from saving money to become eligible to borrow more money? These questions generate from the pressure to meet the ideal of homeownership.
So do I need to share a house forever? Will I ever be independent? Should I expect to own a home before retiring?
These are complex questions. Everybody is living under different strains, and it would be ludicrous to expect that everybody aims for the same goals. 29% of Australian households are renters, but 54% indicated they still had goals of buying their own home within 3 years. That seems like a large percentage until you compare it to the1970s homeownership peak at 75%. Our expectations over housing standards, market projections, employment and wage potential have all changed, as have our values and our levels of disposable income. Instead of facing the question of which home to buy before we retire, we face the question of will we be able to afford to retire at all? What small luxuries I do I have to sacrifice now so that I can afford to move out of my share house and into my own place? What is the true cost of the Australian Dream of independence?
Young Australians are culture changers, movers and shakers, ready to build a world that works for them. It is the role of youth culture to define itself, whether aligned with or against tradition. The tradition of the Australian Dream may secede to a more nuanced view of the benefits of cohabitation, or to a greater valuation of the high-rise apartment. The most important freedom that we can embrace as a generation is our ability to define what is important to us. Live your best life. It’s still your best, even if it’s in a rental.
Pay the rent – we are living our Great Australian Dreams on stolen land
The Great Australian Dream
Do we only care about stress in employees? Do we, as a culture, want to decide to ignore the stresses of those who are not so easy to measure?
Uni Adelaide says the costs of living in adelaide are very affordable
Avg household expenditure on rent is 25%
Cost of student housing in ADL can vary wildly depending on what you settle for
BUT people living on campus in deakin spend up to 40%
People spending more than 30% on housing are considered under housing stress
But it’s worse for international students, who pay premiums even to be here
Uni adelaide AND flinders both centre their info sites on cost of living around how much MORE affordable it is to live here rather than elsewhere in australia, but this distracts from the issue of real housing stress by skewing us towards a comparison view
Which is actually skewed more towards homelessness and overcrowding than they would like us to believe
If you’re on low income or need to live in populated areas, you will struggle, but some argue you just need to move further away
Which would increase your travel costs – would this be a savings or a cost?
Cost of living:
Less reliable source, but fascinating: