You’ll never own a home if you keep going on all those holidays! Most parents tell their Millennial children who are busy packing for another get away. You might have found yourself on the giving or receiving end of these words more than once.
Travel has become so cheap, relative to property, that it has become somewhat of a prize for younger Australians who have temporarily put their goals to own their own home on hold while they go traveling.
In 1981 return airfares to London cost about of $6900, according to Flight Centre, while a 20 per cent deposit on a median-priced house in Sydney was $33,900 in today’s money.
Now that return flight costs about $1300 and the 20 per cent deposit in Sydney is $235,000.
That means for Sydney, a deposit was equivalent to five trips to London back then and now its between 180.
Travel has no where near the financial impact for current first home buyers as it did for the previous generations.
Meanwhile, it’s not actually the youth of Australia who are going travel mad.
Older Aussies can really feel that difference, which might be why they’re so keen on heading overseas. The latest house hold expenditure data from the Bureau of Statistics, released late last year, shows a weak rise in overseas travel spend from 25-43-year-olds in the past decade but a boom in spending from those aged over 50.
Thanks to cheaper flights and Airbnb disrupting the accommodation world, older Aussies are now travelling more than previous generations.
Those over the age of 65 are spending 5.8 per cent of their income on overseas travel, 55-64-year olds spend 4.5 per cent and 25-34-year-old spend less than half that at 2.1 per cent according to ABS household expenditure data.
Young Australians are part of a generation that can comfortably manage an overseas trip, but have a mountain to climb if they want a house. The complete opposite of previous generations.
With house prices remaining at many multiples of income for at least the foreseeable future, property ownership is becoming more narrowly focused. Without change, an increasing proportion of Australians born after 1970 will never get on the property ladder.
Older Australians might not have had much opportunity to travel when they were young the house was the smart option. But they’re certainly making up for lost time now, with a house maybe more than one under their name.
Travel certainly isn’t going to fix anything for young Australians, but it could be a nice way to pass the time until the change referred to by the Grattan Institute offers more options or they could make their flight one-way and decide to live somewhere they can afford.