What’s keeping young first home buyers out of the housing market
In a recent article, Judith Yates discussed the 40-year problem of declining home ownership among younger Australians. The following extract is her concluding section on the underlying issues.
The underlying issues
Short term cyclical factors are not enough to explain declining rates of home ownership amongst younger households. Underlying structural factors and changing institutional arrangements have been critical.
- our system of housing finance that makes it relatively easier for better-off households to accumulate housing assets through debt finance;
- our income taxation system that provides these households with an incentive to treat property as a means of accumulating wealth ahead of its more essential role as providing shelter;
- our system of property rights that ensures those who do own land are able to act as rent-seekers by expropriating for their own increase in land values not of their own making.
These institutional arrangements reinforce existing housing and wealth inequalities.
If the decline in home ownership among younger households is not reversed, then ultimately Australia’s aggregate home ownership rate will fall. Whether this matters is an entirely different question. But it does suggest it’s time policy makers recognise the underlying structural drivers of current housing outcomes and consider which house- holds will benefit from new policies that support property ownership.
Source: The Conversation, 12 Aug 2015 https://theconversation.com/explainer-whats-really-keeping-young-and-first-home-buyers-out-of-the-housing-market-45716
Dr Judith Yates is an honorary associate professor in economics at the University of Sydney. Her research specialisation is housing economics, finance and policy.Know someone interested? Please share