Here's how Baby Boomers and Gen Y compare as first-home buyers

Baby Boomers tend to be blamed for the all-encompassing housing affordability crisis. The mention of this generation in a property article will normally end in finger-pointing.

Much like the skinny soy latte, home ownership has become a perception of right, entrenched in today’s society. We should all be able to afford to live under a roof we own. We continually harp on this issue – it is the Australian dream, after all.

Despite the fact our population has swelled and economic circumstances have changed, the dream has not. I am stating the obvious, but our world and societal behaviours have morphed since the days Baby Boomers hopped onto  the property ladder.

Buying behaviour remains the same – or should I say, the perceived buying power. The three-bedroom, detached family home, with room for a soccer net in the yard, is something that has not remained the same. Perhaps a realistic approach is the  change  needed to be able to deem what is affordable. There has to be room for movement in the description of a dream first home.

Times may have shifted but Gen Y faces obstacles. Roughly one-third are university educated compared with only one-fifth of Baby Boomers. These highly educated individuals come hand-in-hand with HECS debt, low wage growth and underemployment. Let’s also throw escalating house prices in to the mix.

The working world for Gen Y is different from that of Baby Boomers. Never has the word “overqualified” been used so frequently. Many are underemployed or work multiple jobs to make ends meet. The casualisation of work presents a tougher issue when obtaining a mortgage. Banks haven’t adapted as quickly as the Gen Y workforce.

Gen Y may have a tougher journey to purchasing but Baby Boomers have other weighty financial commitments. They often have responsibilities for grandchildren, frail parents (who are living longer), their Gen Y kids staying at home (to save a deposit) and a working life that is forever pushing longer. They are playing a more supportive role than their own parents did of them. Baby Boomers have adapted, life has changed – and continues to change.

The facts cannot be ignored – first-home buyer numbers have declined. They represent 7.5 per cent of the owner-occupied loans financed in NSW, the third-lowest monthly result on record. Dwindling numbers cannot be solely attributed to affordability issues.

Other factors come into play when comparing Gen Y with Baby Boomers. Gen Y settles down and starts working life later, making a single-person household (and income) more likely.

Of course, there is a growing gap between prices and the average weekly earnings. Mortgage repayments against monthly income can be used as an indicator of affordability. In Sydney, the affordability of a home has deteriorated. The average first-home loan is almost five times the average wage. Even more startling, the current median house price is almost 14 times the average wage.

Policy intervention could aid the housing crisis. Otherwise, tenant numbers will continue to rise.