When should I buy my first house?

Younger people are less likely to commit to buying a home than they were in the past.

That is just one of the takeaways presented in a new report released this week by the ARC Centre of Excellence in Population Ageing Research (CEPAR).

Delays in home ownership are consistent with social trends, notably longer lifespans and the fact people are settling down at an older age.

Lead author of the report titled ‘Housing in an ageing Australia: Nest and nest egg?’, Rafal Chomik says, “To give some examples, over the past 50 years the median age of home purchase has increased by six years, from age 27 to 33. Over the same period, the median age of getting a first job has increased by two years; finishing education has been delayed by five years; having a child has been delayed by seven years; and getting married is now taking place eight years later. In fact, the median age at death is now 12 years later, adding scope for people to catch up and purchase a house later in life.”

“This is not to say that affordability and access to housing finance are not important. But the trend toward home purchase delay takes on a new complexion when placed in a broader demographic context,” Rafal Chomik said.

The following chart illustrates the increase in life’s milestone moments.

Note the rise in age for buying a first home and paying off a mortgage.

Centre Director John Piggott, Scientia Professor of Economics at UNSW Business School calls home ownership a “critical pillar in wellbeing and social support through the life course”.

“One way or another, it has always been a central piece of our social support system. It is at least arguable that our social protection system has relied on a high owner- occupier ratio in order to function sustainably and adequately.”

If possible, don’t postpone home ownership

The Australian retirement system is built on homeownership. Superannuation is important, but by deferring home ownership, you are putting yourself in a position to never own a home at all.

“Banks may be reluctant to lend past a certain age given retirement ages are increasing more slowly. There is the potential that in the future more older people end up renting, and if so, we need a safety net to support them as the current retirement income system is failing renters,” Chomik said.

“Currently, the Age Pension offers the same maximum benefit for owners as it does for renters. The Government’s retirement income system review, due to report next year, is an opportunity to take housing into account more fully with the aim of narrowing the financial gap between renters and owners in the future.”

Until now, the majority of older people in Australia have achieved the goal of owning their own home outright. So, if you are a cashed up millennial you may want to think about how you fund your retirement and start looking at property ownership. It’s never too early to think about your future.

While government policy is wanting in this area, the problem is government strategies to manage population ageing largely assume that older Australians are home owners.

This is problematic, however the implied association between home ownership, ageing well and being less of a budget burden can’t be ignored.

It could be years before we see meaningful policy change that takes into account that not everyone is or can be a home owner.

If you do have the capacity – you can determine that with this borrowing power calculator – then the bottom line might be to not delay too much longer.

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