Horrorgraph finally clarifies the housing market dispute between boomers and millennials

A new study may have finally disproved an old boomer theory that millennials are incapable of saving money; Houses were simply more affordable in the 1980s.

The research, published by the Reserve Bank of Australia, examines how Australians have experienced saving for a home over several decades.

A graph included in the 10-page report found that in 1985, potential buyers needed only two years of moderate savings to have enough for an initial deposit.

However, in 2023, it would take a household with an average annual income of $105,000 five and a half years to make a down payment.

Mortgage repayments now require a third of household income, whereas 40 years ago in the 1980s it was only a fifth.

A graphic from a new 10-page report may have finally debunked an old boomer argument that millennials are incapable of saving money: Homes were simply more affordable in the ’80s

In 1985, it took the average earning household just two years to make a down payment, while prospective buyers in 2023 will have to wait five and a half years

According to Angus Moore, senior economist at PropTrack, interest rates have shot up faster in the last 12 months than they have since the mid-1980s.

“Over the last two years we have emerged from a period of relatively good affordability in 2020 and 2021 with very low interest rates compared to now when interest rates have risen at the fastest rate we have seen since the 1980s,” said Mr. Moore news.com.au.

“And that has led to a significant increase in mortgage repayments and means far fewer homes are affordable across the income distribution.”

More bad news for Millennials is that the number of affordable homes has also plummeted in recent years.

Affordability is now at its “worst level” in 30 years, with an average-income household only able to consider 13 percent of the homes on the market.

In the 1990s, the same household could claim about 31 percent of the market.

Today, average-income households must save at least 20 percent of their income for more than half a decade to secure a 20 percent down payment on a median-priced home, according to Proptrack’s latest housing affordability study. report.

Lower-income homes face the biggest hurdles, with a $64,000 annual salary only providing access to three percent of homes on the market.

Where people want to live impacts the purchasing power of potential homeowners, with New South Wales, Tasmania and Victoria having the highest purchase prices.

A middle-income household is limited to just seven per cent of households in NSW.

Where people live impacts the purchasing power of potential homeowners, with New South Wales, Tasmania and Victoria having the highest purchase prices (Image, Melbourne).

However, for those looking to buy in Western Australia, the report’s findings offer a more optimistic outlook on home ownership.

An average income is enough to occupy 22 per cent of WA homes as house prices on the west coast have risen more slowly.

“Five years ago, at the height of the mining boom, Western Australia was actually the least affordable state in Australia…” But since then prices in WA have actually increased quite slowly and it is now a fairly affordable state compared to other states,” Mr Moore said .

The interest rate hikes of the last year and a half are unlikely to continue in the next 18 months to two years, the economist said.

Higher salaries and incomes are also expected to offset higher mortgage costs, although this trend will not happen quickly.

Recent government schemes, including the First Home Loan Deposit Scheme, offer some relief to buyers and building homes from the ground up is still seen as the best way to cut costs.