Younger Australians have borne the brunt of the coronavirus recession, and as a result, many are moving back in with their parents.
Although returning to the family home may be a temporary move for some, others are preparing for lengthy stays, as the country endures its worst recession in almost 90 years.
The downturn has sparked a trend dubbed ‘Generation Boomerang’.
Prior to the pandemic, roughly one in five Australian households were multigenerational (one or more adult children living with their parents) amid a backdrop of rising rent and insecure and casual work.
But economists say the trend could accelerate as Australia battles a long-term youth unemployment crisis.
Saving a priority as pandemic weighs on economy
When Melbourne faced the prospect of locking down on March 22, 27-year-old Elizabeth* packed her bags and drove down the Princes Freeway, bound for Victoria’s Surf Coast.
After renting in suburban share-houses for seven years, she chose to live with her 80-plus-year-old grandparents, expecting lockdowns would be lifted in a couple of months.
Six months on, she told The New Daily she holds no regrets after ending her lease in June, and now acts as a caregiver.
“I must have to some extent appreciated this was going to be a relatively long process because I brought my entire desk and a smaller wardrobe,” Elizabeth said.
Lockdowns across the country saw industries that disproportionately hire younger workers – including hospitality, retail and tourism – grind to a standstill, with analysis from public policy think tank Per Capita finding almost two in three young Australians have inadequate levels of work.
And the Grattan Institute has also suggested young people could be scarred by the prolonged economic downturn.
Not only will younger Australians find it more difficult to break into the labour market, but graduate wages could shrink by as much as 8 per cent, according to the Grattan Institute’s senior associate Matt Cowgill and household finances program director Brendan Coates.
“Over a decade, they lose the equivalent of half a year’s salary compared to otherwise-equivalent young people who graduated into more benign economic conditions,” they said.
However, some younger Australians have seen the crisis as a good opportunity to save money amid a falling property market, while others have overhauled their lives and transitioned into new careers.
Elizabeth estimates she saves roughly $1100 on rent and $300 on other expenses every month. She said she valued the financial security as her workplace faced a cloudy future.
“I think everyone in my age bracket has that fear because you’re at the bottom of the supply chain of a business, so if they’re going to cut someone after the secretaries, you’re probably next,” she said.
“There’s the silver lining of spending more time with my grandparents I wouldn’t have otherwise spent with them, and with the pressure and chatter of living in a city stopping, I’ve reassessed what I find valuable.”
Future homeownership goals a priority for others
Ben, 31, and his partner moved out of their Darlinghurst unit in June after his casual workload dipped to less than 30 hours a week and his partner was placed on JobKeeper.
Instead of finding a cheaper rental, they moved in with his partner’s parents while the city’s rent prices were in flux.
“We were thinking of renting somewhere else, but we bit the bullet after realising house prices were falling and it could be within reach to buy a place in the next 18 months to two years if we were hardcore about saving,” Ben said.
“They’ve brought it up with [my partner] a few times and I was against it originally, although it’s been on the table during our entire relationship.”
Although they traded off some perks of inner-city living, including shorter commuting times and private living (there are currently five people under the one roof), the adjustment only took a few weeks.
“Some things are still weird, like you’ve got to say where you’re going to be at dinner time every night, and I had to figure out how to restructure my working schedule,” Ben said.
Eventually, Ben hopes they will buy a property in Newcastle, or a home further out in Sydney’s west.
How will ‘Generation Boomerang’ affect the property market?
So, what does this desire to live back home mean for households and the economy more broadly?
EY chief economist Jo Masters told The New Daily prior to the pandemic, the ‘Bank of Mum and Dad’ was the “9th or 10th” largest lender in the country as children navigated an already precarious labour market.
With a growing number of young Australians retreating to family homes, Ms Masters said the near-term impact will be felt in reduced levels of discretionary spending among parents.
The effects on the housing market, on the other hand, are unclear.
Although younger people have been disproportionately affected by the economic shock, first-home buyer demand has remained healthy, buoyed by a number of government housing grants.
ABS lending data shows that first-home buyers accounted for 32.5 per cent of new owner-occupier commitments in July, marking a 14.4 per cent increase on June’s figures.
But expected falls in household formation – both due to the ‘boomerang’ trend and plummeting international migration – could play out long term, Ms Masters said.
“The supply side of the equation is slower to respond than demand, particularly in apartments where there’s a pre-COVID flow of completions that can’t be stopped,” Ms Masters said.
“And there’s questions around buyers’ preferences if we work from home more frequently, if there’s a need for an extra bedroom for adult children to live in or a requirement for separate offices or a space to exercise.”
An answer to this situation is a Dual Key property, that is what looks like a standard home is, in fact, a 3 bedroom, 2 bath one side and a 2 bedroom 1 bath the other both with Kitchens and laundry, separated by a Sound and Fireproof wall providing privacy and separation.