Millennials – those born between 1982 and 2004 – might roll their eyes when their parents lecture about why “Gen Y” hasn’t done enough to buy their first home.
These aren’t the good old days when baby boomers were approaching first home buyer (FHB) age. The median house price in Melbourne is 20 times higher today that it was in 1975. If our wages had grown at the same pace, the average Melbournian would earn $120,000 p.a., according to CoreLogic data.
We can conclude, then, that getting on the property is more difficult for millennials than it was for their parents, but is there more to it than that?
Waiting to buy a home isn’t necessarily a sign of a broken system or a lack of housing affordability. There are many reasons millennials are holding off on home ownership.
Why millennials are waiting
Most 18-24 year old Australians are saving for travel instead of a house deposit, according to Budget Direct research, which found that 32.6 per cent surveyed said saving for travel was a priority, whereas only 16.7 per cent prioritised saving for a house.
Waiting to buy a home isn’t necessarily a sign of a broken system or a lack of housing affordability.
They’re also marrying later. In 1976, 64 per cent of young adults (aged 18-34 years old) were married, according to the Australian Bureau of Statistics. By 2011, this rate dropped to 29 per cent. With Australians coupling off and starting a family later, it only makes sense that they’re also waiting longer to buy a home.
Going about things differently
Many millennials do have an interest in the property market, but they’re going about it in a different way. Buying property later means taking more time to research and save for a deposit.
Some millennials are rentvesting. Rentvestors rent in suburbs that appeal to their lifestyle, while buying an investment property in a more affordable part of the city or country.
According to research from realestate.com.au, 23 per cent of property seekers under 30 are looking for investment properties. These properties might be somewhere they want to move in later or they might just be an investment.
Some young people don’t want to travel or rentvest – they just want to own a home!. Even these people, however, are holding off and a lack of understanding might be to blame.
Australians have misconceptions about home lending, according to CoreLogic’s Housing Affordability Survey. Of those surveyed, only 42 per cent were aware that you allowed to purchase a property with less than a 20 per cent deposit and 49 per cent didn’t know about stamp duty concessions for FHBs.
If you’re a FHB, don’t miss out because you’re uninformed. Let us help you understand how to get a home loan.