Late Nesters Stay Home to Save

by Gabriella Dzieciol

May 23, 2006

With the cost of housing rising and rising, it may appear understandable that young people are less inclined to leave the family nest. But how much of this phenomenon is caused by an inability to meet rising financial standards and how much by an inability to meet rising social standards?

According to CPA Financial Planning Manager Chris Benson, young people are a generation who “want it all and want it now”, as told to Australian Women’s Money magazine. Are young people choosing to stay at home longer because they aspire to a first home more upmarket then that of their parents?

Jeremiah Bain, 21, is paying $182/week to live in a spacious house in South Perth which overlooks Kings Park – and he considers that he got a bargain. He and his flatmate pay $730/fortnight for the three-bedroom, two-bathroom house which comes with two balconies, a big study and a games room. He says that when he was looking for accommodation in South Perth,  he saw apartments being advertised for as much as $450/week. He admits he got a bargain but wanted something with a lot of space.

When asked why he wanted to live in an expensive area he said it was because it was central to everything, and he saves a lot of money in transport costs, as well as travelling time. Rising petrol prices also help to offset the cost of living with many places being walking distance from his home. Bain admits that, even working fulltime, rent eats up a considerable amount of his income but it’s worth it.

Brian Grieg, Director of Communications for RIEWA, confirms that “younger people are living at home for much longer”, but doesn’t necessarily agree that it’s because their standards of living are exceptionally high, rather, points out the price boom has locked many young people temporarily out of the market. With the medium cost of a house now at $353 000 and houses as far out as Clarkson – particularly those close to a train station – commonly topping $250 000, young people are having to save for longer. For some university graduates just starting their careers, they are eligible for maximum loans of $250 000, which prices them out of all but the cheapest of properties.

Grieg admits that for some people, location is a factor, and with rent often significantly cheaper then mortgage repayments, “(some are) happier to rent in the city then buy in the suburbs” he said.  

Giz Watson, Greens member for the Legislative Council for the North metropolitan Region and advocate of affordable housing, claims many young people are forced to spend more then 30% of their income – a rule of thumb for accommodation – with the alternative being that they are staying at home longer and older. “It’s pretty critical for people trying to get a foot in the market” she says.