The red-hot market is having the opposite effect on those who own their homes
Australia’s booming housing market is discouraging renters from having children – while having the opposite effect on homeowners, according to research from the University of Sydney.
“The increase in housing costs may directly impact fertility, which may have significant fiscal implications over the long term,” study authors Kadir Atalay, Ang li and Stephen Whelan said in the study, which was published in the Journal of Housing Economics.
Property prices have soared in Australia, driven by record-low interest rates. The value of the Australian housing market spiked by $596.4 billion to almost $9 trillion in the three months through June, according to a Bloomberg report – the largest quarterly gain on record.
The University of Sydney research found that the soaring property market correlated with a spike in fertility among property owners, Bloomberg reported. A $100,000 increase in housing wealth was associated with an 18% rise in the probability of homeowners having a new child. Married couples who are mortgage holders are among the most likely Australians to have children.
The red-hot market seems to have the opposite effect for renters, however, discouraging them from having children.
Read next: Is Australian housing swinging toward a buyers’ market?
The University of Sydney told Bloomberg that the research was the first time that family plans had been measured against home prices in Australia. The university said that the study’s findings matched up with similar research in the UK, US and Canada.
“In an environment in which Australia and other countries face an aging population, the empirical results indicate an additional challenge for policymakers,” the report authors said.
The paper pointed out that dwelling costs are a mechanism through which policymakers can influence fertility, Bloomberg reported. The Australian fertility rate has been below the replacement rate since the late 1970s. In that time, the real price of housing has more than tripled.
