Core Insights - Despite various housing affordability policies being introduced, Australian housing prices are unexpectedly accelerating, particularly among the cheapest properties, rather than luxury homes [1][2] - This trend is likely to exacerbate the generational gap in home ownership, making it increasingly difficult for young people to afford homes [1][4] Housing Market Trends - Data from real estate platform Domain indicates that in the past three years, the largest price increases in most capital cities have occurred in the lowest-priced quarter of properties, contrary to traditional housing market cycles [2][10] - Nicola Powell, Chief Research and Economics Officer at Domain, notes that this reversal indicates a shrinking pool of affordable homes for ordinary buyers, leading to increased competition for limited options [2][11] Generational Disparities - Home ownership rates among Australians under 34 have seen a dramatic decline, with only 49.7% of those born between 1987 and 1991 owning a home by age 30-34, compared to 68% for those born between 1947 and 1951 [5][6][7] - The ability of subsequent generations to catch up in home ownership is diminishing, with only 36.1% of those born between 1992 and 1996 owning a home in their twenties [8] Impact of Government Policies - Eliza Owen, Research Director at Cotality, emphasizes that the rapid price increase of low-cost homes is a significant signal, with this segment leading the market since March 2024 [10] - Concerns are raised regarding the federal government's upcoming expansion of the First Home Guarantee policy, which may further inflate the prices of low-cost homes by removing income limits and broadening eligibility [12][13] - Forecasts suggest that this policy could increase housing prices by approximately 0.5% over the next six years, with some models predicting a 6.6% increase in the first year [16]