This research analyses the economic constraints on people’s ability to buy a home over the four decades from the early 1980s. It analyses how home ownership has evolved over time; considers demand subsidies provided to first homebuyers; and examines the support from other family for first homebuyers.

Home ownership rates for people aged 30 have fallen from a high of 65 per cent among those born in the late 1950s to around 45 per cent among those born in the 1980s. This development reflects a range of social, demographic and economic influences. Coinciding with the decline in housing affordability, successive cohorts of Australians have entered home ownership at lower rates at any given age. 

Younger cohorts that experience lower levels of home ownership at ages 30–34 years do exhibit some catch-up over time—in other words, home ownership rates of that group as they age approach the home ownership rates of older cohorts. However, that catch-up remains incomplete: after 10 years, less than half of the gap at age 30–34 years has closed, and between two-thirds and three-quarters of the gap is closed after 20 years. This means that as individuals reach retirement age, it is likely that home ownership rates will be lower than in earlier generations.

As house prices have increased, this has led to substantial increases in the housing wealth of existing home owners—especially older home owners. Coupled with financial innovations that allow households to draw on housing equity, parental transfers—both inheritances and financial gifts—appear to have become one of the key enablers of the transition into home ownership.