A survey has revealed that almost three-quarters of Millennials said they believe the housing market needs more regulation to slow property prices.
The Borrower Sentiment Index for the June 2021 quarter released by homeloanexperts.com.au has revealed that 70 per cent of Millennials said they believe the housing market requires more regulation to keep a lid on property prices.
In addition, 40 per cent of Millennials surveyed said they believe that the support should come in the form of first home buyer (FHB) schemes, while 30 per cent said they thought the regulations should target property investors.
Comparatively, 53 per cent of Gen X felt more regulation was needed, with 37 per cent of those supporting restrictions on property investment and 26 per cent believing support for FHBs was the appropriate method.
The findings have followed the release of a report by the National Australia Bank (NAB), which found that government incentives such as the First Home Loan Deposit Scheme, the HomeBuilder Scheme, and various state-based government support measures are playing only a “moderately” significant role in helping FHBs enter the property market earlier.
The survey of 500 respondents also revealed that 42 per cent of Millennials said they were priced out of the region they wished to buy in and forced to search for property elsewhere, demonstrating that the younger cohort is feeling the pinch of rising property prices.
However, it is not just Millennials impacted by rising house prices, with the survey results revealing that 51 per cent of all respondents had to either change the area they were looking in or the type of property they purchased to fit their budget.
Baby Boomers fared best in the search, with 60 per cent able to buy the property they wanted without any amendments to their budget or search parameters.
Despite the constraints, 33 per cent of those surveyed said they felt it was the right time to buy property.
While almost three-quarters (74 per cent) said the asset was overvalued, less than half (44 per cent) said that this meant that it was a bad time to buy property.
Millennials are the most bullish on property, with 45 per cent saying it was a good time to purchase despite 87 per cent saying that they felt property is currently overvalued.
In comparison, 74 per cent of Gen X and 67 per cent of Baby Boomers said that they believe the asset is overvalued.
Only 29 per cent of Gen X think that now is a good time to buy property, compared with 40 per cent of Baby Boomers.
Commenting on the survey findings, homeloanexperts.com.au CEO Alan Hemmings said the data showed why many Millennials have been looking beyond the traditional home buying criteria when the time comes for them to purchase property.
“After the considerable growth in property prices over the last few months, we’re seeing evidence of Millennials turning back to the drawing board in order to purchase property,” he said.
“Whether this involves them delaying their purchase, turning to family members to act as guarantor or even considering other options like rentvesting, Millennials are being forced to consider other methods in their property journey.
“What we are seeing, as more workplaces embrace flexible working conditions, is more Millennials considering suburbs on the outskirts of cities, the ‘Goldilocks suburbs’ where they can still commute from one day week, but which offers much better affordability than city hubs.”
Research from Per Capita recently revealed that the lifetime cost of owning a home over 30 years has increased by 130 per cent.
The research found that for a Silent Generation family buying property in 1970, the average repayment cost over the course of the mortgage was 11.2 per cent of their gross income. This increased to 19.5 per cent of gross income for a Baby Boomer family buying a home in 1985.
A Generation X family who purchased a home in 2000 and have around nine years remaining on their mortgage will spend 25.5 per cent of their gross income on servicing their mortgage debt.
For the Generation X family, low wage and inflation growth have meant that their debt would decline at a significantly slower rate in real terms compared with previous generations.