The home buyer demographic in Australia has changed significantly, with more Australians aged over 45 getting mortgages. New figures tell the story of how older Australians are increasingly paying the price for home ownership. This trend is especially worrisome given the negative effect it could have on their retirement. As Shane Oliver, chief economist at AMP noted, this trend is a symptom of wider demographic changes and economic pressures.
In a quite alarming trend, the share of first home buyers age 19 and younger has drastically dropped off. It dropped from 26% in 2005 to a paltry 0.5% by 2025. In a more surprising turn, the amount of first home buyers over 45 has boomed. This market segment has skyrocketed from a mere 2% in 2005 to nearly 10% today, changing the face of the property market. Buyers in the 35-40 age range currently account for nearly 14% of all first-time home buyers. That’s a big jump from 7% just 20 years ago.
Demographic Shifts in Home Buying
The growing diversity among home buyers is reflective of a larger shift in Australian society. Shane Oliver thinks this transition is due in part to longer schooling trajectories. Young people are spending longer in school and university before entering the workforce.
“It partly reflects demographics, you know, people staying at school longer, then university and starting their career later and getting married later,” – Shane Oliver
…terrible impact that lack of affordability in the housing market has had on Americans. This perfect storm of conditions has pushed many first-time homebuyers to delay their homeownership hopes.
“But, of course, it also partly reflects poor affordability. It’s taking a lot longer to save for a deposit,” – Shane Oliver
Farther down the chain, lower housing affordability is pushing younger buyers out of the market. Meanwhile, Australia’s seniors are returning to work, more often out of need than by preference. The growing prevalence of one-person households following divorce or separation has driven this trend as well.
Financial Implications for Retirees
The increasing habit of people carrying mortgages into old age should be a cause for great alarm regarding retirement security. Kate Browne, a real estate researcher, warns that borrowers are taking on huge risks that might threaten their retirement years.
“We’re looking at enormous debt now for one or two people to carry,” – Kate Browne
Browne goes on to lament that this is a trend that’s destined to continue, as long as property values keep climbing. Yet, with home prices increasing by 4.8% in just the past year, many older Australians are faced with a complex and competitive market.
“I don’t think we’re going to stop seeing people who are in their 40s and early 50s looking to enter the property market, whether it’s on their own after a divorce or … because it’s taken that long to be able to get that deposit,” – Kate Browne
As a consequence, millions of older Americans have less retirement savings and larger mortgage bills. This situation has led to a lively debate among fiscal analysts over the long-term viability of the direction.
Real-Life Experiences Highlighting the Issue
Nicola Dawborn, a 59-year-old who recently entered into a new mortgage, is a prime example of this new trend. Her lack of superannuation savings was one of the key reasons for taking out debt later in life, as she recognizes in the interview above.
“Look, I haven’t got a huge amount of super so I was really trying to avoid that scenario,” – Nicola Dawborn
Dawborn’s situation reflects a growing reality where older Australians are compelled to seek mortgages despite potential risks to their financial future. She refers to her new loan as “like a little beacon of light. It shows that no matter what her financial picture looks like, her optimism still shines through.
Daniel Langen, a mortgage banker, is seeing a similar trend in the profile of his clients. Many individuals seeking loans are now older than traditional borrowers in their 20s and 30s and often come with detailed repayment plans.
The Australian real estate market is in the middle of a sea change. Young buyers and older buyers equally find themselves challenged in many complicated ways. With household wealth increasing by $470 billion between April and June—driven by rising property and land values—the pressure on prospective home buyers remains high.
