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Dear Fellow Property Investor,
It seems that Young Australians have given up on ever buying their own home!
IT’S what we all strive for – owning our own home. But for a whole generation of Aussies, hope of ever getting there is fading fast.
A GENERATION of young people are giving up hope of ever buying their own home.
Sky-high prices, tighter lending restrictions, enormous upfront costs, choking cost of living and stagnated wage growth have combined to make the Great Australian Dream a nightmare.
As reported by news.com.au last week, buying a home without putting yourself in a precarious financial position now requires an enormous salary well above the national average.
And with many banks requiring up to a 20 per cent deposit, the amount a first-time buyer needs to save can be impossible to scrape together.
“It’s a massive barrier,” says Sally Tindall, head of research at RateCity.com.au.
“It’s cities like Sydney, they’re looking at the market and throwing their hands up in despair, knowing they’ll never be able to buy there.”
Where once the notion of taking your first step on the property ladder was difficult but not impossible, most in this cohort of young Aussies have lost hope.
ONLY FOR THE PRIVILEGED
Data shows the number of first-time buyers in the market is on the rise again, thanks in part due to softer prices and less competition from investors.
Recent figures show one-in-four buyers in NSW at the moment are first-timers, with a tripling in the number of applicants for the stamp duty concessions they are eligible for.
There have been positive movements in Melbourne, Adelaide and Brisbane too, as well as major regional centres like Bathurst and Geelong.
Across the country, first-time home buyers accounted for 18 per cent of all mortgage commitments in June, which represented the best result since October 2012.
Even with a reduction in prices, buying is still something only young Australians in a privileged position can manage.
A VERY TOUGH TASK
A major impediment to home ownership is cost of living pressures. Younger Australians say they simply don’t have much money left after they’ve paid their rent and bills.
Research by ME Bank found two-thirds of people are forking out more than 30 per cent of their salaries to pay rent.
People under 30 are especially uncomfortable about their financial positions, a study by ME Bank found.
“Overall comfort of this cohort has decreased by 11 per cent to a record low of 5.3 out of 10,” it said.
Of all households in debt, the survey found that the number worried they won’t be able to meet minimum required payments on liabilities has risen over the past 12 months.
Young people are living at home with their parents for longer in a bid to save money faster, research shows. Ms Tindall said it’s a good strategy if it’s available.
“Squirrel away every bit of spare change you can. The more money you have saved, the easier it’ll be to get on the ladder,” she said.
“It’s boring advice but it’s true – cut down on costs. Instead of jumping in an Uber, take the train. Bring your lunch instead of buying it. It all adds up.”
“I know it takes a long time and I know that ham and cheese sandwiches can get really monotonous but you have to take drastic measures.”
THE SOLUTION IS TO INVEST FIRST TO START!
Kind regards,
Konrad Bobilak