Updated Oct. 11, 2024 at 4:55 p.m.
PARIS — Young people are buying fewer homes — and it's not by choice. Homeownership is declining globally, with rates dropping in “several major advanced economies,” according to the Economist, a consequence of drastically changing labor markets, scarcity and inflation that has been pricing millennials out of achieving a life milestone that young people have been aiming to achieve for generations.
Among the regions of the world where incomes have not kept pace with housing prices are southern Europe, Asian cities and most English-speaking countries. Across Europe, homeownership rates among 25-34 year olds dropped from 25% in 2005 to 11% in 2018, according to Eurostat.
In southern Europe in particular, homeownership rates at age 35 have declined over 10% for those born in the 1980s, with only 50% of millennials in this demographic owning their homes, according to the World Economic Forum.
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This economic fact has social costs. Young people unable to afford homes are more likely to delay marital and childbearing decisions. Coupled with the cost of living crisis and declining birth rates worldwide, the issue of homeownership accessibility has far reaching implications.
Spain: A generation of renters
In Spain, reports La Marea, the Barcelona Institute for Urban research released a report in October revealing that many renters will no longer be able to own a home even when they are well into adulthood — and even old age.
This shift is especially troubling because it limits young people's ability to build wealth through property ownership—a key pathway to financial stability for previous generations.
With property prices driven up by wealthy investors and large property owners, young people face significant barriers to buying homes, making it increasingly unlikely they will ever own property. This lack of access to homeownership contributes to growing economic inequality and leaves many young people financially vulnerable.
Italy: missing out on tradition
In Italy, the declining rate of homeowners tears at the basic fabric of society. There is a tendency for Italians to prioritize homes as an investment and traditional symbol of family, with some 74% of the population living in homes they own.
However, stagnant wages, high youth unemployment rates (34.7%), and rising interest rates in Italy are making it increasingly hard for young people to buy homes and start families. Older generations are far more likely to be homeowners, with 55% of homeowners in the country having no children, according to Eurostat.
Young Italians enter the job market later, and are not able to commit to a mortgage.
The borrowing capacity of young people is also lower than it used to be in Italy, who now face stringent lending criteria.
“Young Italians enter the job market later, even with unstable contracts, so they are not able to commit to a mortgage,” Valentina Lagasio, an economics professor at Rome's Sapienza University told La Stampa.
The government's efforts to address the issue through housing policies and incentives have fallen short, including the introduction of a “first home bonus” for families with multiple children aiming to buy homes, which would cover up to 90% of qualifying families’ home mortgage payments.
Greece: still recovering from recession
Similarly in Greece young people are unable to afford homes, and are therefore forced to live with their parents for longer. The average Greek moves out at 30.7 years old, and more young adults ages 18-34 live with their parents than the average European young adult.
This dynamic got worse during the Great Recession, after which Greece struggled to restore its homeownership rates to its pre-2008 status. In fact, the national statistical office reported a 11.3% decline in homeownership rates from 2005 to 2021, and a 14% decline in homeownership among Greek young adults.
The economic crisis, defined by high amounts of debt in Greece, prevented young people from saving up for a down payment. Home and rent prices have been climbing since then; as of 2021, over one-third of disposable household income in the country is allocated to housing-related expenses, the highest among EU countries, Athens-based daily Kathimerini reports.
UK: affordability crisis
Housing remains unaffordable in the United Kingdom’s major cities, but has accelerated since the cost of living crisis began in 2021. Higher food, electricity and fuel costs that were fed by the Russia-Ukraine war and sanctions on Russian oil, have sent up inflation in the country.
2 million aspiring homeowners do not think they will be able to buy a home.
Young people without adequate time to begin saving before the crisis are having a difficult time entering the housing market: the UK HomeOwners Alliance found that nearly 2 million aspiring homeowners do not think they will be able to buy a home.
This is not for lack of demand. Aspiring homeowners aim to follow in the footsteps of their home-owning parents, according to the HomeOwners Alliance. Yet home prices have surged, especially in London, one of the most expensive cities in the world for residential property.
UK hopeful buyers cite affordability as the main obstacle in obtaining a home. Those in the 18-34 year-old age range are three times more likely to rely on UK government funding programs in order to purchase a home, including equity loans and individual savings accounts.
Australia: intergenerational inequality
Other Anglophone countries are suffering from combined cost of living and housing crises. In sunny Sydney, Australia, the housing supply hasn’t caught up with post-pandemic demand, driving up rental and home prices.
Sydney’s median house price is forecasted to increase 5.9% annually until 2026, with the average property price already topping 1.4 million AUD in 2024 (over $900,000).
Intergenerational inequality debates have been at the center of the country’s dialogue. With Boomers and Gen Z’ers often butting heads, with the latter arguing that the would-be ‘Australian Dream’ is now an empty promise. As Boomers enjoy the benefits of uninterrupted economic growth, young people are burdened by large debt that feeds a widening wealth gap: the Australia Housing and Urban Research Institute found that in 2023, homeownership rates for those born in the 1980s has been declining for two decades to 45%, compared to 65% for those born in the 1950s.
The housing crisis has spread beyond Sydney. More than 190,000 households across Australia’s eight states and territories are on the social housing waitlist, as the government pledges to construct 20,000 new dwellings. Until then, young aspiring Australian homeowners are stuck paying record-high rents.
Japan: priced out of the city
In the greater Tokyo area, home prices have squeezed out young potential owners for years on end. A Real Estate Economic Institute study found that the average home price in the Japanese capital has jumped for a third year in a row, and new condo prices have increased for a fifth year in a row.
The average condo price in Tokyo is 15 times the average white collar worker’s salary.
Similar to Australia in its low supply, Japan also has unusually high building costs. Tokyo is the most expensive city for construction by cost per square meter, which was a major problem before the city’s 2021 Olympic Games. A foreign investment boom since then has further driven up apartment prices.
Young professionals who have not been able to accumulate wealth yet have suffered as a result. The ordinary early-career Japanese worker is unable to afford a home, and struggles to afford rent as it is. The average condo price in Tokyo is a record 129.6 million yen ($865,000), or 15 times the average white collar worker’s salary.
Young people looking to buy homes to expand their families are forced to look outside Tokyo, to the city’s suburbs. The Japanese government is encouraging the move, as overcrowding in the capital and declining national birth rates pose an acute issue for the country. But for young professionals hoping to buy property in the mega-city, it may be an unrealistic dream.
Canada: post-pandemic prices
Compared to its southern neighbor, the average home price in Canada was $30,000 higher than the average home in the U.S. in 2022, in a record high post-pandemic housing market. High sticker prices are leaving young people in the greater Toronto and Vancouver areas doubtful about the prospect of purchasing a home in the future.
Nearly half of Canadian renters, of which young people are the largest group, have given up on their goal of buying a home, according to a 2023 Mortgage Pros survey.
Canada is a nation of homeowners, leaving the remaining housing market undersaturated and highly in demand for those remaining. Half of Gen Z’ers and one-third of Millennials surveyed are considering searching for more affordable properties in other provinces, also outpriced by strategic real estate investors.
Less concerned about family goals and more so about guaranteed shelter, the housing situation has left young people in Canada more pragmatic and less aspirational.
This article, originally published June 2, 2024 was updated oct. 11, 2024 with enriched media and information about the Spanish housing crisis.