Australia’s Hot Housing Market Puts Renters Off Having Kids
Australia’s red-hot housing market is discouraging people who rent their homes from having children, while having the opposite effect on those who own their property, according to University of Sydney research.
“The increase in housing costs may directly impact fertility, which may have significant fiscal implications over the long-term,” authors Kadir Atalay, Ang Li and Stephen Whelan said in the study that was published in the Journal of Housing Economics.
Australia, like much of the developed world, is grappling with soaring property prices fueled by record-low interest rates as central banks try to nurse their economies through the pandemic. The value of the nation’s housing market jumped by A$596.4 billion ($425 billion) to almost A$9 trillion in the three months through June, the largest quarterly gain on record.
A A$100,000 increase in housing wealth is associated with an 18% rise in the probability of home-owners having a new child, the research showed. Married couples who are mortgage holders are among the most likely to have kids.
For renters though, soaring housing prices tend to have the reverse effect, putting them off having children.
Sydney University said the research was the first time in Australia that family plans had been measured against home prices, adding that the findings matched similar work in the U.K., U.S. and Canada.
“In an environment in which Australia and other countries face an aging population, the empirical results indicate an additional challenge for policy makers,” the economists said.
The paper highlights that dwelling costs provide another mechanism for policy makers to influence fertility. The Australian fertility rate has been below the replacement rate since the late 1970s, a period in which the real price of housing has more than tripled.
Australia has historically relied on immigration to drive population growth.
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