Not long ago, many Australians assumed they’d one day own a home. Real estate didn’t require a 6-figure executive salary to purchase a cozy bungalow or a charming Victorian; a steady job, down payment and a coat of paint was all it took to call a house a home.
But if you’ve browsed real estate listings recently or spoken with anyone in the market for a home, you know that home ownership is downright aspirational in many parts of the country. Now, housing affordability in Sydney and Melbourne is lower than in San Francisco and London, two expensive cities famous for their absurdly competitive and pricey properties.
In Sydney, house prices grew 55% in just 3 years with a median sale price of $1.6M.
These factors directly contribute to the third shift we’re exploring in this series: the impossibility of home ownership and the rise of renting. No longer is home ownership an assumption, which means many Australians are not putting money into mortgages, but spending and living quite differently.
Here’s the good, bad and fascinating about how this shift will impact your customers and your business for decades to come.
What the Data Shows
If you’ve just found this series (or need a refresher), Insights Exchange partnered with Pureprofile in February 2022, surveying 1,700 18+ Australian residents, revealing substantial changes within our culture, economy and consumer behaviour.
When it comes to renting and home ownership, our research unveiled some striking insights:
- Four in ten Australians are currently renting
- One in two 25-34 year olds are renters
- One-third of Australians live in an apartment, duplex or granny flat
- Approximately 47% say they’re unlikely to buy a home in the next 5 years
But how do we know this trend isn’t a short-term phenomenon, one that ends with a market correction or post-pandemic normalcy? For one, we have historical data from past census data..
Look at these Australian Institute of Health and Welfare stats and you’ll see home ownership has plummeted over decades:
• In 1971, home ownership for 30-34 year olds was 64%; down to 50% in 2016
• That same year, 50% of 25-29 year olds owned homes; down to 37% in 2016
• From 1996 to 2016, home ownership among 50-54 year olds dropped 6.6%
So, if Australians aren’t spending as much money on mortgages, where is that cash flowing?
You may recall from our Part 2 article about adult kids living with parents, money not spent on housing is going to fund experiences (28% of respondents), buying a new car (37% of respondents), purchasing new furniture (41% of respondents) and going away on holiday (38% of respondents).
Priorities and spending have changed greatly. Have brands and advertisers updated their strategy to meet this new reality and, if not, how do they catch up?
What This Means for Advertisers & Brands
While home ownership is still the “norm” in much of Australia, it’s the “norm” for fewer and fewer people each year.
This shift has been happening for decades, however, it’s been supercharged in recent years with record-breaking housing prices and a myriad of economic pains. It’s not just changing consumer behaviour and purchasing power either; it’s changing the size and type of spaces Australians inhabit, how they view their communities, where they live and what’s considered “home”.
Brands need to deeply understand how this shift has impacted their buyer persona and customers, especially those with younger, urban consumers in places like Sydney and Melbourne, and make changes based on data. Ignoring this change will only spell disaster.
How brands approach solving customer problems should evolve. For example, a hardware store TV spot in urban areas from 20 years ago would have focused on helping homeowners take pride in their home and grow its value. Today, that hardware store TV spot would show how they help renters needing to patch holes to get their security deposit back or add reversible upgrades to their next rental.
Media buying and ad placement will have to be smarter, too. In suburban and rural parts of Australia where home ownership is more accessible, the home ownership assumption mostly works. Getting the right message to the right demographics in the right geographies becomes a pain point—and an opportunity, allowing advertisers to narrowly target consumers with messaging that resonates with their specific living situation.
With money flowing to priorities other than a new patio or a picket fence, many brands have an opportunity to evolve, from pricing to packaging to products.For example, some car manufacturers have rolled out subscription-based pricing, including Volvo and Porsche, transforming the notion of car ownership. For a generation of consumers not married to long-term ownership of assets, subscription or community-shared products and services could become popular. Imagine rented or shared sporting equipment, tools and large items that don’t fit neatly in a small flat, ideal for urban Australians.
Like most shifts, this new trajectory can be looked at as a threat to your business or an opportunity for innovation. The most important thing you can do now is target a better understanding of both your risk and upside.
What Your Brand Can Do Now
Most every brand and advertiser should dig into what this change means for their consumers and company at this moment. While some brands are unaffected, others face major, unknown threats posed by this shift; think about how low home ownership rates might affect banking, construction or insurance industries.
Think long-term, too. What does it mean if millions of people don’t have access to the equity in a home as they near retirement or make large purchases? What does the purchasing behavior of a generation of kids raised by parents renting a flat look like? These current shifts will echo through time; brands planning to stick around should be aware of what their future may look like.
If you want to build confidence around your short and long-term future and grow your understanding of how these major shifts will impact your business, there’s a solution. Insights Exchange will match you with cost-effective, vetted consumer insights specialists who will dive deep into the data, trends and statistics. You’ll finally have a solid grasp on what the future holds—and how to win—with actionable insights.