Buying a house is not the only major milestone Australians are delaying


Between 1966 and 2016 the median age of getting a first full-time job rose by nine years to 25; finishing education has been delayed by five years to 22; having a child has been delayed by seven years to 31; and getting married is now taking place eight years later, also at 31.

And this trend extends well into later life. The median age of paying off a mortgage, for example, was 52 years in 1966 but has now climbed to 62 years.

Australians are leaving major personal milestones until later in life.

Australians are leaving major personal milestones until later in life.

Retirement is also coming later. The median age at which workers leave the labour force has increased by three years since the mid-1960s to age 64 and is expected to rise further.

That means workplaces will need to adjust to having far more employees aged in their late 60s and 70s.

So what’s behind this inclination for people to leave things longer? Economic change has been a crucial factor.

A growing share of jobs, especially highly paid ones, require well qualified workers. People are spending much more time getting educated as a result.

An impressive work history also counts for a lot in today’s labour market. That helps explain the trend to have children later as women delay motherhood to accrue as much work experience as possible before taking time out to care for small children.

But there’s another fundamental demographic driver at play: our growing longevity.

The median age of death grew by 12 years between 1966 and 2016, from 70 years to 82 years.

Australia’s “healthy life expectancy” (an indicator of years of life expected to be in good health) has also been on the rise.

The CEPAR researchers point out that longer life spans are associated with delayed milestones throughout the life cycle including longer adolescence, later ages of leaving studies, starting work, becoming a parent or buying a house.

It’s plausible the extended “envelope within which we live our lives” has contributed to the delays.

Dr Rafal Chomik, the lead author of CEPAR’s report, says the deferment of major life events, such as purchasing a house, “makes sense” given our lives have become longer.

“There’s a general trend for people to want flexibility in their lives for longer and to delaying settling down, finding partners, starting families and buying a house,” he says.

“Living longer lives enable us to make those decisions and follow different paths.”

But our new habit of leaving things longer comes with some fresh challenges.

In Australia the surge in house prices during the past two decades has coincided with a sharp fall in the home ownership rates among those aged less than 50 years.

Women are putting off motherhood to bed down their careers.

Women are putting off motherhood to bed down their careers.

Chomik points out the age of home purchase has been delayed in a range of other comparable nations – including Germany, Italy and Switzerland – where property prices have not risen nearly as much relative to incomes as in Australia.

It’s likely the recent slump in home ownership among younger age groups will rise as those who put off buying properties make purchases later in life. They will still enjoy home ownership status for a relatively long period simply because life spans are getting longer.

But the share of people retiring with a mortgage is set to rise appreciably even though excessive debt in older age can be risky.

The share of retirees with housing debt has already jumped from 23 per cent to 36 per cent during the past decade.

Some who could afford to buy a house might defer too long and find themselves locked out of the property market if banks choose not to give mortgages, which commonly last for 25-30 years, to older borrowers.

And it is inevitable a growing share of the population will “defer indefinitely” and never own a home, especially those on lower incomes who inherit little or no property wealth.

Those old-age renters will be especially vulnerable because there’s a presumption in Australia’s retirement system that pensioners will own their own home.

CEPAR estimates 37 per cent of renters aged 64-74 have both a low income and pay more than a third of it in rent, up from 21 per cent in 1996.

Loading

New estimates, that take account of housing, show older Australian renters have among the highest relative poverty rates among the wealthy country members of the Organisation for Economic Cooperation and Development. They also have greater rental affordability stress than other age groups.

“A proportion of people, especially on low incomes, are going to miss out on home ownership and the retirement incomes system isn’t set up to look after them,” warns Chomik.

Most Viewed in National

Loading



Source link National

Enter your Email Address

Leave a Reply

Your email address will not be published. Required fields are marked *

Social Media Auto Publish Powered By : XYZScripts.com