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Is homeownership still the goal? 1 in 5 Aussies believe they will always rent

When it comes to home ownership, it’s safe to say that most Australians believe the pros outweigh the cons. That sense of independence and financial freedom is a major drawcard for some. Not to mention the little things, like the freedom to renovate, or even drill some holes and mount a television on the wall.

Yes, home ownership has long been something that Australian renters would pine for, but as property prices rise and lending restrictions tighten, has that dream become fragmented?

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So, how do Australians view renting?

rental-ages

When we surveyed 1,058 people on their attitudes towards renting a huge one in five Australians, (19.2 per cent) believe they will always rent.

Does this mean that many Australians don’t want to rent, or they feel priced out of the housing market?

Well it's probably a bit of both. A growing number of people view renting as a more practical solution. Germans have historically been content to rent throughout their lives with just 46 per cent of households owning a home, this is in comparison to Australia’s 65.5 per cent rate of home ownership.

Renting can come with many benefits, including less responsibility, leaving the payment of taxes and maintenance and property repairs to the owner, and the freedom to invest your savings elsewhere.

With that said, many Australians view homeowner as the finish line. Laura Prael, Director of LEP Digital, bought her first home on Sydney’s North Shore in 2014, “I saved for the deposit over 12 months. I sold my car (that I owned outright), and sold things in my home on eBay (clothes, furniture). I also stopped spending money on buying clothes and going out. I made my morning coffee at home and brought my lunch to work with me every day. It was a tough year, but it was worth it to see my savings grow. After living in it for a year, I moved out, and turned it into an investment property for tax purposes which has helped me to keep up with the loan repayments.

Ms Prael bought her second apartment on the Central Coast this year, “I used some of the equity on the first apartment and savings earned over a year of working hard in my own business. We only just scraped in to get the loan by getting rid of our credit cards and selling a car to get out of that debt.

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Queenslanders expect to rent for longer

where-australians-expect-to-stop-renting-by-35

By state, Western Australians (49.5%) were the most confident they’d cross the homeownership finish line before 35. This may be as a result of their average and median salary combined with the drop in house prices in recent years.

New South Wales, Queensland, and Victorian residents were the least optimistic they’d stop renting before 35 and they also have the highest median house prices in their cities (aside from ACT who are nestled after Victoria and before Queensland with a median of $591K).

One in five Gen Ys say they’ll ‘rent forever’

Gen Ys are arguably the ‘key players’ in the home ownership debate. While we did find that nearly one in three millennials believed they’d buy a home between 26 and 35, one in five think they will ‘rent forever’.

When you dig a little deeper, it’s clear there’s a shift among Gen Ys and their priorities. More and more young Australians are saving for overseas trips in lieu of a house deposit, suggesting that Gen Ys value experiences over home ownership.

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Young Aussies are still optimistic when it comes to home ownership

when-gen-y-think-they-will-stop-renting

Despite the harsh buying conditions in some of Australia’s capital cities, one in four Aussies do not expect to rent past the age of 35, while a further 17.7 per cent expect to buy a home before 25. This suggests many Australians are optimistic and believe they will achieve the Australian dream in their twenties and early thirties.

The home ownership landscape has changed and with all of the doom and gloom in the media, some homeowner aspirations may be squandered. With small shifts in your lifestyle and finances it’s still possible to break into the housing market. It’s never too late to start saving and making positive changes to work toward your home owning goals.

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Tags: new purchase, first home buyer, deposit, saving, rent purchase

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COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
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EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of major and non-bank lenders including Click Loans which is a wholly owned subsidiary of Auscred Pty Ltd and a related body corporate of Auscred Services, your credit assistance provider. Although Lendi compares over 1600 products from over 30 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
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