It seems many Australians are pessimistic about the homeownership goals of many of the younger homebuyers composed of the millennials and Gen Zs cohort.
A study from Aus Property Professionals showed that seven in 10 Australians believe homeownership is out of reach for young adults without their parents’ help.
Of the group, around a third said rising interest rates and high house prices have made breaking into the market a struggle for first-time buyers while a quarter cited rising rent prices and increasing cost of living as a major factor.
Meanwhile, 13% of the group said Gen Zs and millennials would want to live a “luxurious lifestyle” and are not prepared to save for a house deposit.
Aus Property Professionals founder and managing director Lloyd Edge said even though getting into the property market is tougher than ever, young adults should not be discouraged.
“It is even more challenging in the 2020s to save that first deposit, however, with the right strategy in place the ‘Great Australian Dream’ of homeownership is still possible, even if you need to start outside of the capital cities or ‘rentvest’ for a while until you can buy your dream home,” he said.
“There is still a lot of good opportunities out there if you’re financially savvy and implement the right strategy for your circumstances.”
Mr Edge shared recommended four strategies that can help young adults in their journey of achieving homeownership:
Mr Edge said rentvesting is becoming a popular strategy among young buyers as it provides a way for them to live in their desired place while owning a property somewhere else where prices are relatively more affordable.
“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,” he said.
Buying a home with a friend or a family is also a viable option that could help buyers get their foot on the door sooner.
However, Mr Edge said there is a certain level of prudence needed when going this route.
“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,” he said.
Mr Edge believes discipline is a crucial trait most would-be homebuyers must have to be successful in their ventures.
“Unless you’re a very high-income earner you’ll need to cut back on luxuries in order to save a decent sized deposit,” he said.
Living frugally, Mr Edge said, will be help homebuyers develop a lifelong financial habits that would be useful when they take out a home loan.
“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.”
With the availability of resources at their fingertips, young adults have no excuse to be unaware about the options that they have.
Mr Edge said research is key to be able to get an accurate understanding of how the market works and how values rise and fall.
“Look for similar properties in the same area that have sold recently, and the average days on market,” he said.
“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.”
Photo by Andrea Piacquadio from Pexels.