Home ownership for the young reaches record lows

HOME ownership among young Australians has fallen to the lowest level on record as an explosive property boom squeezes out all but the wealthiest.

Supercharged by record low interest rates, a lack of supply and a tax system that favours property investors, home prices have surged more than 140 per cent in the past 15 years.

Melbourne, ranked the world’s most liveable city the past seven years by the Economist Intelligent Unit, is now the planet’s sixth-most expensive place to buy a house.

The boom has also propelled Sydney past London and New York to rank as the world’s second-most expensive housing market.

In response, home ownership among the young has plunged. Only 45 per cent of 25 to 34-year-olds own their own home – down 16 percentage points from the 1980s, with almost half the decline coming in the past decade.

At the same time, hefty mortgages have pushed household debt to a record high, acting as a drag on the economy’s 26 years of unbroken growth.

As more people retire still owing a mortgage, or renting, they are more likely to qualify for government welfare, undermining the $2.3 trillion superannuation system.

“The great Australian dream of home ownership is becoming a nightmare,’’ said Brendan Coates, a housing policy expert at the Grattan Institute. “It’s down to a collective failure of government policy that will take at least two decades to fix.”

Voter angst over housing affordability is mounting. Almost 90 per cent of Australians fear future generations won’t be able to buy a home.

Failure to address the issue is heaping pressure on a government already under fire for the botched rollout of a $49 billion national high-speed internet network, and energypolicy bungling that has sent power bills soaring.