Boomers are less impacted by rising costs than their children IMAGE Freepik
Boomers are less impacted by rising costs than their children IMAGE Freepik
  • Australians under 25 are 3x more likely to experience housing stress than those 65 and above.
  • Unemployed people are 144% more likely to enter housing stress than full-time employed.
  • Renters are 125% more likely to enter housing stress than owners, and less likely to recover.

Rising housing costs are taking a significant toll on younger Australians, while baby boomers remain relatively unscathed from the surge in the cost of living according to a new study.

Research from the Australian Housing and Urban Research Institute (AHURI) and UNSW Canberra found that those aged under 25 are three times more likely to experience housing stress compared to those aged 65 and above.

The study involved a predictive model for analysing housing stress by taking into account factors like age, employment status and different life events.

The report found age is the biggest predictor of housing stress, with adults under 25 being 214 per cent more likely to struggle with housing costs than older adults aged 65 and above.

The risk reduces slightly to 154 per cent for those aged 25–34 and 156 per cent for those aged 35–44.

Employment second biggest factor

Employment status is the next largest predictor after age, with unemployed people 144 per cent more likely to enter housing stress than those in full-time employment.

Not having a university education is associated with a 78 per cent higher risk of entering housing stress.

A person is considered to be in housing stress if they’re in the bottom 40 per cent of income earners and spending more than 30 per cent of their before-tax income on housing costs. Those in housing stress may not have enough remaining to cover food, clothing and other essentials.

Critical life events contribute to stress

Lead author from UNSW Canberra, Dr Milad Ghasri said a range of life-related factors impacts financial stress.

Dr Ghasri said “Different critical life events occur at different ages, which can have an impact on household income and push people into housing stress.

“Using a risk-pathway model, we can detect based on certain factors which demographics might be likely to enter into housing stress following certain life events but are not yet eligible for support, and if they’re likely to recover from it without intervention” she said.

Renting more stressful than owning

The research also found that renters are 125 per cent more likely to enter housing stress than owners and are also less likely to recover from it.

The probability of recovering from housing stress within the first year of entering housing stress is 39.4 per cent for renters and 48.9 per cent for homeowners.

“Renting is much more insecure than homeownership,” Dr Ghasri said.

Deputy Director of UNSW’s City Futures Research Centre, Professor Hazel Easthope said renting is particularly tough in Australia, more so than in many other countries, because of our limited protections for renters, including allowing no grounds terminations and unlimited rent increases.

Understanding housing stress and life events

While young to early middle-aged adults between 18–44 years, those looking for work and people living in rental housing are the groups most vulnerable to housing stress, those aged 65 and above who own their own home, have a postgraduate degree and are engaged in full-time employment are the most resilient to housing stress.

“Life events that impact housing stress can occur more rapidly for younger people who have not had a chance to build up the safety net to fall back on, such as savings from their career or support systems,“ Prof. Easthope said.

“But the impact of housing stress can be extreme, no matter the age.”

While younger adults are more likely to enter housing stress, they’re also more likely to recover from it, according to the research.

However, adults aged 65 and above who are less likely to enter housing stress are much less likely to exit it if they do.

“For older people, if they use up all their resources, they may not be able to easily pivot in the job market or have certain obligations which make it less likely they will recover if they fall into housing stress following a critical life event,” Dr Ghasri said.

The critical life events that increase the likelihood of entering housing stress are the birth/adoption of a child, separation, marriage, giving care to a family member, or being let go or made redundant, the study found.

The researchers said understanding more about these events as contributors to housing stress can support proactive policy options.

Dr Ghasri said, “A significant shortcoming of housing assistance is that it’s provided only once someone is in urgent need.

“Rather than stepping in once someone is already struggling, we can use modelling to shape early intervention policies, which may reduce the need for long-term assistance” she said.

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