In 2022 the once “Great Australian Dream” of owning your own home is looking more unrealistic than ever for many Gen Z’s and Millennials. Skyrocketing house prices and slow wage growth have led to a housing affordability crisis, with many young people struggling to save the necessary funds for a 20 percent deposit. Various governments have proposed their solutions to this crisis, for example, first home buyer grants, and the current federal government’s Help to Buy scheme or the NSW government’s Shared Equity scheme. However, while helping a few thousand people each year, these programs do not address the wider issue of housing affordability.
New research, commissioned by buyer’s agent and property investment strategists Aus Property Professionals reveals that a staggering 7 out of 10 (69%) of Australians believe that home ownership is out of reach for young adults without help from their parents to come up with a deposit. Of this group, 31 percent say that rising interest rates and high house prices are making purchasing your first home difficult. 25 percent believe the housing affordability crisis is due to rising rent prices and high cost of living, while 13 percent claim that Gen Z’s and Millennials want to live a luxury lifestyle and aren’t prepared to sacrifice and save a house deposit.
Some anecdotal comments from the survey highlighting the difficulties include:
“It depends if you are purchasing the house by yourself or with a friend or partner. It is VERY difficult for single people to buy their own home unless you’re on a massive wage. Purchasing with a partner or friend is still expensive but more achievable.”
“Anyone now starting work on the basic wage has no hope of home ownership unless they progress quickly to a far higher paid position. Most will find it difficult to pay rent, car payments/public transport, rising food costs to ever be able to save for a deposit let alone pay of a loan, particularly if interest rates return to the 4%-6% as was the norm for decades.”
Lloyd Edge, Founder and Managing Director of Aus Property Professionals, says “It’s a shame, but not surprising given the current circumstances, that many young adults feel this way about home ownership. I purchased my first property, a one-bedroom unit, when I was 28 on a teacher’s salary of no more than $70,000 per year. It’s even more challenging in the 2020s to save that first deposit, however, with the right strategy in place the ‘Great Australian Dream’ of home ownership is still possible, even if you need to start outside of the capital cities or ‘rentvest’ for awhile until you can buy your dream home.”
Since buying that first one-bedroom apartment at age 28, Lloyd has gone on to build a portfolio of 18 properties worth $15 million. An investment journey that he talks more about in his best-selling books Buy Now and Positively Geared. As a buyer’s agent, he’s helped his clients purchase a combined $500 million worth of property (combined) all around Australia.
On a more positive note from the survey findings, of the 31 per cent of respondents who believe owning your own home is still achievable for the average young adult in 2022, 19 per cent say that there’s plenty of affordable housing in regional and rural areas, making the Great Australian Dream still within reach for Gen Z and Millennials willing to take the leap and purchase outside of the major capital cities.
For people interested in achieving their property goals, but don’t know where to get started, Lloyd recommends implementing at least one of these strategies:
- Rentvesting: Rentvesting is a great way to get ahead financially and build wealth if you can’t afford to buy a home in your ideal place to live. By renting where you’d like to live and buying an investment property where you can afford to buy, for example in a regional area, you can get your foot on the first rung of the property ladder. By using equity from the investment property you can keep growing your portfolio and work your way up to buying your dream home.
- Buying with family and friends: Buying with family and friends is another strategy that can get you ahead financially by entering the property market sooner rather than later. Teaming up with family and friends to buy property makes it easier to save for a deposit. However, with this strategy you must seek legal advice and make sure that everyone involved is fully on board with what to expect so the property doesn’t cause conflicts and relationship breakdowns down the track.
- Living frugally: Living frugally is essential to getting started in property. Unless you’re a very high-income earner you’ll need to cut back on luxuries in order to save a decent sized deposit. Furthermore, lenders will look at you more favourably for a loan if you can demonstrate that you’re financially responsible and have a savings surplus each month. Living frugally will also set you up with some great lifelong financial habits and teach you how to manage money carefully.
- Do your research: It is essential to do thorough research on the property markets to get an accurate understanding of the market value of the type of property you wish to buy. Look for similar properties in the same area that have sold recently, and the average days on market. Also, never purchase a property without doing your due diligence and ordering a building and pest inspection. If this all sounds overwhelming, a buyer’s agent can help you through this process with their expert knowledge of the property market and negotiation skills, and by doing all the due diligence for you.
Lloyd says “Even though getting into the property market is tougher than ever, young adults shouldn’t despair as there is still a lot of good opportunities out there if you’re financially savvy and implement the right strategy for your circumstances. My own success story is an example that with hard work, determination, and persistence it is possible to achieve financial freedom through property investing.”
This article was sourced from a media release sent by Kathlene Quere of Agent 99 PR