How getting smarter is keeping young Aussies out of property market

students afr Sydney saved in news Pic by Rob Young.
Generic students, university exams, lecture.
Students sitting an exam.
students afr Sydney saved in news Pic by Rob Young. Generic students, university exams, lecture. Students sitting an exam.
Generic Canberra Photos pictured is For sale houses apartments and units in Canberra today 13th of July 2009 photograph Glen McCurtayne AFR BRW REAL ESTATE

Generic Canberra Photos pictured is For sale houses apartments and units in Canberra today 13th of July 2009 photograph Glen McCurtayne AFR BRW REAL ESTATE

But it's not just the smashed avocados' fault - or even the Baby Boomers' and a distorting tax system.

It's also, partly, the education arms race, greedy universities, the gap year or years, and job snob millennials.

In the tradition of maximising housing doom-and-gloom reportage, the quoted Bloomberg story claims in its first paragraph that our explosive property boom "squeezes out all but the wealthiest". Three paragraphs later, it's stated that "only" 45 per cent of 25-to-34-year-olds own their own home. That would mean an amazingly large percentage of us are "the wealthiest".

Progress can come at a cost. Your typical Baby Boomer was a full-time worker in his-or-her mid-teens. In 1971, Australia's year 12 retention rate was just 30.6 per cent with a yet smaller cohort continuing to tertiary education. The "gap year" hadn't been invented yet.

Now, with gap years, universities stretching out courses, pushing double degrees, and the education arms race turning honours and masters into what Year 10 and Year 12 once were, it's commonplace for young Australians not to leave "school" until their mid-20s - a decade later than many of their parents.

No wonder they are slower to start families and for the nesting instinct to kick in with the desire to own a home.

In August, just 26 per cent of Australians aged 15 to 24 were in full-time work - 858,000 out of 3.242 million. Another million worked part-time, the usual profile of students and, increasingly, new graduates.

It's a very fine thing that the 2016 census found 22 per cent of all Australians were attending a tertiary or technical institution. A fair whack of them would have been part-timers but it still represents a large number of people who would not be in the position of earning the money to try to save a deposit - and it's the deposit hurdle that's been the cruellest part of rising property prices.

Of our 310,938 21-year-olds on census night, 37 per cent were attending a university or other tertiary institution. Of the nation's 25-year-olds, a considerable 15 per cent were still at school.

(As an aside, six centenarians filled in the census as attending university or other tertiary institution, along with 123 nonagenarians - which would somewhat redefine adult education and "mature age entry".)

Becoming a smarter, better-educated nation is the cornerstone of a more prosperous future for Australia, but it comes at a disruptive cost to what had been considered normal when we had fewer years of formal education.

There are other troubling aspects of our university industry, as explored by Ross Gittins in this space. It is very fair to ask if students and taxpayers are getting value for money for the years spent at university, particularly when employers commonly claim their graduate hires know little of use when first employed, that their real education starts on the job.

The education arms race is only a part of the housing affordability problem in our two most desirable cities, but it is a part - a bigger one than the avos and the de rigueur international holidays. The interaction of negative gearing and 50 per cent capital gains tax discount remains the biggest single suspect but, again, is only part of the problem along with cheap money, NIMBYs and planning or the lack thereof for our growing population.

And, while trying to keep some perspective about the problem amidst constant housing sensationalism, it's worth always remembering two things: the genuine affordability crisis isn't for people trying to buy a home, but for people without the means to ever have a deposit; and first-home-buyer affordability is really only a major problem in our two thriving and therefore highly-desirable cities. Expensive housing is pretty much a given for any booming international city. If you're wanting much cheaper housing in Sydney and Melbourne, be careful what you're wishing for.

This story How getting smarter is keeping young Aussies out of property market first appeared on The Sydney Morning Herald.