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Despite housing affordability being one of their biggest concerns, younger consumers remain optimistic about buying a home.
More than half of young Australians are hopeful they will own their own home despite the cost-of-living crisis and housing affordability pressures, according to NAB-owned UBank.
Consumers aged between 18 and 35 are more optimistic about their financial futures compared to older generations, with 55 per cent hopeful about owning their own home, research from NAB Behavioural Economics, on behalf of UBank, shows.
The optimism about younger prospective home buyers comes in spite of 52 per cent of the demographic citing money as their top worry.
The cost of living was cited as the top concern across all ages, with 65 per cent of 18–25-year-olds, 79 per cent of 26–35-year-olds, and 83 per cent of 46–55-year-olds listing it as their biggest issue.
Housing access and affordability ranked as the second-biggest concern, with 51 per cent citing it as top of mind. Concerns were particularly pronounced among 26–35-year-olds, with 62 per cent expressing high levels of concern.
“Just like the research suggests, when we speak to our customers, we see an optimistic, engaged, and empowered generation seeking to take greater control of their money, better understand their finances, make more informed decisions, and have greater input into their futures,” Andrew Morrison, UBank’s chief customer experience officer, said.
“They recognise the challenges but believe they can still achieve their goals, including the great Australian dream of home ownership, even if it takes longer than for previous generations.”
Consumer confidence still lags
The latest findings from UBank come after the start of the first rate-easing cycle for four years, a process that has helped ease pressure on borrowers and led to hopes of another rate cut when the central bank next meets in May.
Market data has shown that sentiment is on the up, with NAB saying in its Residential Property Index last week that housing market sentiment rallied in the March quarter, rising to “a well above average +40”, after moving lower in the previous three quarters.
According to the major bank, this was largely due to an acceleration in national house price growth, saying that February’s rate cut was “likely to have also factored”.
NAB’s index found that sentiment lifted across the country, except in Tasmania (though still positive at +33).
Sentiment was highest in the Northern Territory (+100) and South Australia (+80) and bounced back into positive territory (though still below average) in NSW (+31) and Victoria (+16), where home values have also started growing again in recent months. Sentiment in the ACT, however, remained negative (-25).
“With rates now lower and expected to fall further, confidence also improved. Most property professionals in WA, QLD and SA assess market conditions as rising, approaching their peak or at the peak of the market, while VIC and NSW are at the start of recovery,” NAB’s chief economist Sally Auld said.
Commercial property sentiment has also risen, reaching an eight-year high, according to NAB.
Similarly, the Westpac Consumer Sentiment Index, released earlier this week, rose 2.2 per cent to 92.1 in May, rebounding on a sharemarket rally and lower fuel prices.
Westpac said that encouraging inflation data had shored up consumer expectations for interest rate cuts, boosting consumer sentiment.
Despite some positive signs, Matthew Hassan, Westpac’s head of Australian macro-forecasting, said: “The index is still 3.9 per cent below its March level and in ‘firmly pessimistic’ territory overall.”
Looking ahead, better-than-expected wage growth could boost consumer confidence, after wages rose 0.9 per cent in the March quarter to be 3.4 per cent higher than a year ago, according to the Australian Bureau of Statistics.
[Related: May rate cut ‘near certainty’ as inflation hits RBA target]
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