20 Sep The Great Australian Vanishing Dream
“Give me a home among the gumtrees
With lots of plum trees
A sheep or two, and a kangaroo
A clothesline out the back
Verandah out the front
And an old rocking chair”
The Australian mindset has moved a long way since John Williamson first sung this song back in 1982.
It was the great Australian dream that you would own your own home with a couple of bedroom, kitchen and a quarter acre block so you can play backyard cricket.
Nowadays, a lot of Gen X and Gen Y are giving up on home ownership with the view that it is simply not achievable.
The data backs this up. According to the Grattan Institute, home ownership has reduced from 68.6% in 1991 to 65.5% in 2016.
This may not sound like much, but it means there are approximately an additional 310,000 people today who are renting in comparison to 1991.
To breakdown the data even further, in 1981 home ownership amongst those aged between 25 and 34 was more than 60%. In 2016 it has reduced to under 45%.
The Great Australian Dream is vanishing.
If you ask any Gen Y as to why this is happening, they are going to point out that affordability is the main reason why they cannot purchase their own home.
But rather than look at strategies they could implement to own their own home, like boosting your income, rent-vesting or utilising your parents equity, they simply put home ownership into the too hard basket and simply give up!
If you are serious about Mastering Your Money one of the most fundamental aspects is owning your own home.
The Future Of Long Term Renters
I have seen plenty of clients approaching retirement who are still forking out $300 to $600 per week in rent and wondering why they cannot afford to save for their retirement.
Unfortunately, their dream of home ownership has passed and they will be constantly paying rent for the rest of their lives.
If you are serious about Mastering Your Money, you must get into the housing market as soon as possible.
It may be tough in the first few years, but over the long term you will achieve great benefits.
If you are serious about Mastering Your Money, you must get into the housing market as soon as possible. It may be tough in the first few years, but over the long term you will reap the rewards.
“Owning a home can provide a sense of community belonging, a sense of prosperity, the motivation for additional savings, and the basis for investing in a business. Inside Story
Is Housing Affordability Real?
Are houses really that expensive? It depends on where you are looking.
I have no doubt that property prices in Melbourne and Sydney are ridiculously expensive with median house prices in excess of $1 million.
For the bank to lend out $1 million to a single person with no children, they would have to be earning over $150,000 per annum. Even on that income, I would suggest you would struggle to save the recommended 20% house deposit of $200,000, let alone fund mortgage repayments of over $60,000 per annum. (Source: Aussie How Much Can I Borrow?)
I’m not an expert on the Sydney property market but I do live an hour from Melbourne in Geelong. The median hose price in Geelong is still high at approximately $700,000, but I know that you can buy and/or build a three bedroom house in a nice suburb for approximately $400,000. This is much more achievable for a first home buyer. It is estimated that over 17,000 take the trip from Geelong to Melbourne each day for work.
I’m not an expert on the property market of each city in Australia, but I have no doubt there are places where it is still very affordable for people to purchase their own home.
If you work in the city, this may mean starting out in a regional area and commuting every day, or purchasing a small inner city apartment. (Be careful purchasing an inner city apartment as they can be very poor investments).
From Little Things Big Things Grow
Your first home is not going to be your dream home, or is it going to be your forever home (although I would suggest retaining your homes where possible and converting them into investment properties).
But it is a start.
And most importantly, that first home is going to be your stepping stone in purchasing your next home.
The capital growth you make on your first home will fund your deposit for your next home.
And maybe that home will be your dream home.
Don’t let your great Australian dream slip you by.
Let others give up on it if they choose. But if you are looking to Master Your Money Now, you must get serious about getting into the property market.
If this is a topic that you would like to discuss in more detail, please go to www.MasterYourMoneyNow.com.au/getstarted to book in your complimentary 30 minute strategy session.
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Disclaimer: This information is general information only. You should consider the appropriateness of this information with regards to your objectives, financial situation and needs. Past performance does not guarantee future returns.
Chris Carlin is an Authorised Representative (No. 1235031 for financial services and No. 514748 for credit) and Master Your Money Now Pty Ltd ABN 65 627 229 681 is a Corporate Authorised Representative (No. 1265677 for financial services and No. 514747 for credit) of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523