Young people want to buy homes to live in, and it’s not fair that they can’t.

In a large-scale youth survey taken last November, 73% of Australians aged between 15 and 19 said they aspired to own their own home. A month later, the Grattan Institute released a report telling them they’d be the first generation to be worse off than their parents.

We already know that people in their 20s and 30s have entered the housing market later than their parents and in much smaller numbers. If trends continue, the situation will be worse for the 15 to 19-year-olds. Forget Gen X and Gen Y: the new moniker for workers in their 20s and 30s is “generation rent”. But it’s not a moniker they asked for. They still want to own a home to live in, and want to know why they can’t afford it.

So far no leader has bothered to explain why the so-called Aussie fair go is dead and buried to anyone under 40. Is it really fair, after all, that young people can’t buy a flat because their parents bought too many?

The lack of attention being paid to the issue, frankly, sucks.

Owning a home isn’t the sum total of the great Australian dream, but it’s traditionally been a pretty big part of it.

In the 1970s, high wages across the board meant most working people could get a mortgage. Baby boomers grew up with the assumption that if they had a full-time job, they could afford to buy a house – even if it was a fibro shack in the suburbs – and pay it off in their working life. It was a hallmark of the egalitarian society Australians are so fond of remembering.



“Banks would lend you a multiple of your income and off you went, because there weren’t investors in the market, so house prices tracked to ordinary household incomes,” Bill Randolph, director of the City Futures research centre at the University of New South Wales, told me.



Those times are over, not because of any accident, but by deliberate policy. In the deregulation craze of the late 1980s and 1990s, tax policies that were favourable to investing in property – such as those that allowed people to deduct interest payments from other forms of income – encouraged many mum-and-dad investors to buy property. Recent record low interest rates have added fuel to the property speculation fire, so much so that it’s led to the head of ANZ claiming that there is a “an irrational obsession with housing as an investment class” in Australia.

The result is that today, boomers buying their second, third or fourth investment property are direct competitors to young working couples trying to buy a home to live in.

The shift in housing from a social good – someplace for us to live – to a wealth-generating investment is a large factor in the discrepancy of wealth between the older and younger generations.

Randolph puts the current unaffordability of housing down to rising income and wealth inequality. Rising income inequality relates to the increasing gap between those earning the highest wages and those earning the lowest. Wealth inequality is down to the fact that the boomers have built wealth through the long boom in house prices, which the younger generation either invested in at the end of the boom, or not at all.

Australia will probably never get back to a time when all workers can dream of owning their home. Wages have diverged too much and the damage of the long property boom in terms of wealth disparity can’t easily be fixed. We have a working poor population that will never be able to afford to buy a house, flat or fibro shack in the ‘burbs. The affordable housing policies required to ensure an appropriate standard of living for those people are another issue entirely.



But there is a section of the population – particularly among Gen Y – for whom, with a little policy shifting, the dream of home ownership could still be achievable.

The answer doesn’t lie in quick fixes like the first home owners’ grants, which Randolph describes as “nonsense”. He says the only winners in those programs are developers and people who were almost ready to enter the market anyway. The result was another rise in prices.

“We’ve got to move away from subsiding home ownership in such a gratuitous way,” he says. Instead, he believes a suite of taxation changes at the state and federal level that properly target property wealth is the only way to make housing more affordable for middle-income earners.

It can’t be done quickly or cheaply, and it will require a brave politician to start raising the issues, but there’s little doubt it can be done.

Failing that, perhaps we should revisit the “fair go” and concede that home ownership doesn’t have to be a sign of an egalitarian society. There are plenty of rich countries with decent income equality where a lot of people rent. Take Germany, for example, where only 43% of people own their own home. Germans are happy to put their money into a range of investments, housing not being one of them. But the rental market is completely different there.

Institutional investors look for long-term tenants for a long-term return on rental income. There are few investors in the market for a quick buy-and-sell capital gain. The government regulates rental price increases and there is general security for tenants. A person’s rental house is their home, where they can paint walls, have pets and decorate to their hearts’ content. In Australia, a renter is lucky to get a one-year lease and has to ask the landlord to hang a picture.

There used to be German-style institutional investment in Australia and a return to it could help to balance out the market here. With more investors buying property as a long-term investment, there are fewer in it for the quick capital gain and therefore fewer buyers pushing up prices by competing for single-dwelling residences.

Scrapping taxes such as stamp duty, which Randolph calls a hangover from feudal times (“Why would you tax somebody who wants to buy something? Surely you should be taxing the person who just sold it?”) and imposing taxes on property wealth won’t be popular. Many baby boomers will be vociferously opposed, and the developers ... well, there’s a reason NSW outlawed donations to political parties.

But surely there’s some political mileage in engaging the next generation. They just want to buy a home to live in, and isn’t that fair enough?