Generation Z have been given a list of homebuyer savings hacks that could net them close to$500,000 in a decade and breathe life back into the great Australian dream.
But they’ll have to live with their mum and dad for the duration, give up barista coffee and take away meals, invest in shares instead of just putting money in savings and maybe even change career to get the full benefits.
Analysis by comparison website Finder shows Sydneysiders following average Gen Z savings patterns could put away up to $523,000 in 10 years. Nationwide the average is about $487,000.
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In Melbourne it’s $465,000, Brisbanites could save a hefty $479,000 and those in Adelaide $452,000.
Off the mainland, Hobart’s wannabe homebuyers could pull together $467,000.
But in every city the single best thing Generation Z can do to buy a home sooner is to move back in with their parents, with the potential savings on bills, groceries and rents totalling an estimated $320,000 across 10 years — with variations from city to city based on local rents.
Even staying with the olds for half that duration would still lead to a $140,000 shot in the arm for a young person’s buying aspirations, wiping years off the time needed to save for a home.
Finder’s Richard Whitten notes the best way to save for a home might not be for everyone.
Finder money expert Richard Whitten said while living bill free with their parents was the best way to speed up buying a home, and more effective in the cities with the highest rents, it wouldn’t work for everyone.
Swapping savings for investing in an Australian Stock Exchange index fund over the past 10 years would have taken the average Gen Z’s savings balance of $12,356 to a whopping $173,324 – provided they tipped in an extra $816 each month, which surveys indicate is their average savings margin for the timeline.
The same approach in a transactional bank account would bring that figure to just $117,780, while a high-interest savings account could have raised the deposit to $135,674.
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Finding more money to put into savings or investments via cheaper alternatives for key bills, from mobile phones to car insurance, could get $1589 back.
Finder also found that giving up takeaway coffee, takeaway meals, a gym membership and Netflix would add $6723 a year back into savings for wannabe buyers. Over a decade that sum adds up to a hefty $90,619.
Get your coffee at home and you could be saving more than $1200 a year.
And walking away from a low-paid career and studying for a better wage could also pay off in the long run, with arts students likely to earn more than $30,000 less a year than those who go into engineering or IT after a 10-year period.
For a buyer looking for a home worth $500,000 today, that would cut the saving timeline to 14 years, down from 22, if price growth follows the past decade’s average. Those hoping to get a $1m residence would go from 45 years of saving to 27.
Mr Whitten added that taking up some trades could lead to a higher income in significantly less time — and some qualifications could be earned via fee-free TAFE positions.
“As the price of properties have gotten higher, it’s almost like you can’t do certain jobs and afford to buy in certain cities,” he said.
As an engineer you might not just be building your own housing future.
Even just changing employer could help younger people to up their income more rapidly.
“Most people seem to find that if you stay in a job for a long time, you don’t get the same pay rises or promotions as if you went somewhere else,” Mr Whitten said.
He added that while the total savings figure was a “best case scenario”, it was possible to “take years off your plan to buy” using just a few of the savings tactics.
Even a $170,000 deposit would get you into a median-priced unit in any major capital today, and those prices are less likely to escalate at the same rate as houses.
The same sum would also come close to a 20 per cent equity stake for a house in any capital outside of Sydney.
These top home-saving hacks could get Generation Z’s home dream back into shape in the span of a decade.
“It’s more difficult than it’s ever been, but it’s not impossible,” Mr Whitten said.
“For me, there’s no sense living like a monk for 10 years just to buy a house; for most people that would be a pretty miserable existence.”
Drawing up a budget to see how comfortable you are with what you’re spending on some of these things, rather than cutting them out entirely, might be a better solution.
Real Estate Buyers Agents Association of Australia president Melinda Jennison said the figures showed the “great Australian dream is definitely still achievable” for those willing to take a stepping stone approach buying a more modest home before upsizing later — and especially for those who got started saving early.
Streamline Property Buyers managing director and REBAA president Melinda Jennison.
“There’s a lot of people who have nailed down, compromised on lifestyle now and created a better lifestyle for their future,” Ms Jennison said.
The professional homebuyer added that saving hard might mean choosing between travelling abroad and some little luxuries, but it was now very difficult to have it all.
And while there might be a temptation to postpone savings, she warned homes historically became more expensive over time — meaning those sacrificed while young would be better off in the long run and those who delayed could struggle later.
MOST VALUABLE HOME-SAVING HACKS
Live with parents — $32,132 a year*
Invest in shares — $55,544*
Swap to a more lucrative career — $18,255 a year**
Use a high interest savings account — $17,894*
Reduce mobile phone bill — $156 a year
Reduce car insurance — $496 a year
Reduce energy bills — $660 a year
Reduce broadband costs — $277 a year
Give up takeaway coffee — $1243 a year
Give up takeaway meals — $3848 a year
Cancel gym membership — $1404 a year
Cancel Netflix — $227.89 a year
Source: Finder analysis
Bill reduction costs assume no prior efforts to cut costs in a number of years.
National averages used to generate all figures.
* average across 10 years
**10 years after completing tuition
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