When it comes to home ownership, it’s safe to say that most Australians believe the pros outweigh the cons. That sense of independence and financial freedom is a major drawcard for some. Not to mention the little things, like the freedom to renovate, or even drill some holes and mount a television on the wall.
Yes, home ownership has long been something that Australian renters would pine for, but as property prices rise and lending restrictions tighten, has that dream become fragmented?
When we surveyed 1,058 people on their attitudes towards renting a huge one in five Australians, (19.2 per cent) believe they will always rent.
Does this mean that many Australians don’t want to rent, or they feel priced out of the housing market?
Well it's probably a bit of both. A growing number of people view renting as a more practical solution. Germans have historically been content to rent throughout their lives with just 46 per cent of households owning a home, this is in comparison to Australia’s 65.5 per cent rate of home ownership.
Renting can come with many benefits, including less responsibility, leaving the payment of taxes and maintenance and property repairs to the owner, and the freedom to invest your savings elsewhere.
With that said, many Australians view homeowner as the finish line. Laura Prael, Director of LEP Digital, bought her first home on Sydney’s North Shore in 2014, “I saved for the deposit over 12 months. I sold my car (that I owned outright), and sold things in my home on eBay (clothes, furniture). I also stopped spending money on buying clothes and going out. I made my morning coffee at home and brought my lunch to work with me every day. It was a tough year, but it was worth it to see my savings grow. After living in it for a year, I moved out, and turned it into an investment property for tax purposes which has helped me to keep up with the loan repayments.”
Ms Prael bought her second apartment on the Central Coast this year, “I used some of the equity on the first apartment and savings earned over a year of working hard in my own business. We only just scraped in to get the loan by getting rid of our credit cards and selling a car to get out of that debt.”
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By state, Western Australians (49.5%) were the most confident they’d cross the homeownership finish line before 35. This may be as a result of their average and median salary combined with the drop in house prices in recent years.
New South Wales, Queensland, and Victorian residents were the least optimistic they’d stop renting before 35 and they also have the highest median house prices in their cities (aside from ACT who are nestled after Victoria and before Queensland with a median of $591K).
Gen Ys are arguably the ‘key players’ in the home ownership debate. While we did find that nearly one in three millennials believed they’d buy a home between 26 and 35, one in five think they will ‘rent forever’.
When you dig a little deeper, it’s clear there’s a shift among Gen Ys and their priorities. More and more young Australians are saving for overseas trips in lieu of a house deposit, suggesting that Gen Ys value experiences over home ownership.
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Despite the harsh buying conditions in some of Australia’s capital cities, one in four Aussies do not expect to rent past the age of 35, while a further 17.7 per cent expect to buy a home before 25. This suggests many Australians are optimistic and believe they will achieve the Australian dream in their twenties and early thirties.
The home ownership landscape has changed and with all of the doom and gloom in the media, some homeowner aspirations may be squandered. With small shifts in your lifestyle and finances it’s still possible to break into the housing market. It’s never too late to start saving and making positive changes to work toward your home owning goals.
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