They could be forgiven for being pretty pessimistic, but for the majority of young Australians, the Great Australian Dream of home ownership is still very much alive.
New research by mortgage brokers Loan Market – whose parent company the White Family own Australia’s largest real estate network Ray White – reveals for Gen Z and Millennial buyers, homeownership still represents financial stability, independence and long-term wealth, with many hoping to own their own home outright before they retire.
A survey of 1000 people in January revealed 72 per cent of Aussies felt owning a home was important, with 58 per cent planning to own their own home before their retirement.
Almost half (47 per cent) viewed property as the best way to build wealth, compared to stocks and shares (12 per cent), bitcoin (5 per cent) and exchange traded funds (5 per cent)
Interestingly, almost six in 10 (56 per cent) of those aged 18 to 24 said owning a property was critical for financial success.
Loan Market spokesman and mortgage broker Caleb Bax said home ownership was more important than ever for many – particularly the young.
Loan Market mortgage broker Caleb Bax.
“A lot of them are looking for that stability and not wanting to rent anymore, they’re not wanting to pay someone else’s mortgage off and they are looking at getting into it as a wealth creation thing, especially more in the last couple of years because obviously we’ve seen all this crazy growth,” he said.
“I’ve been saying to a lot of people for a while now that buying a house is a team sport in Australia so you really need dual income to be able to afford the mortgage, as well as all these living expense increases that we’ve seen.”
The research showed the importance placed on home ownership as a wealth creation tool increased with age, with 69 per cent of 25 to 34-year-olds believing it was important, with this figure increasing to 73 per cent for 35 to 44-year-olds, 75 per cent of 45 to 54-year-olds and 79 per cent of 55 to 64-year-olds.
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Interestingly, Victoria had the highest rate of respondents respond in the affirmative, at 78 per cent.
“Obviously there’s been for years now a lot of speculation around the government and all the taxes and those kind of things that are imposed on buying property and they’ve still got the highest belief that that’s where you grow wealth, and maybe it is because it’s the tried and true method and they can see that obviously at the moment it’s going through a lull but in time, looking at property as a long-term hold, you’re going to come out on top,” Mr Bax said.
“It’s obviously been a bit of doom and gloom there for a while with all the land taxes and those things imposed on them going against the property prices.”
He said despite young people being up with the latest innovations, they still preferred the physical nature and tried-and-true performance of bricks and mortar over more volatile investments like cryptocurrency.
“If you’re living in it, you’ve got the benefits as well as seeing it as an investment, but also living in the property as well and having a roof over your head,” he said.
“The other benefit of the property market is that people have easier access to leverage.”
Mr Bax said with changes to negative gearing being introduced in the federal budget this week, he would expect young people’s views of wealth creation around property to change.
“Focusing on paying the home down is going to be a massive driver for wealth creation, then maybe try to leverage property and borrow extra cash,” he said.
Freedom to do what you want with the property and land was favoured the strongest in Queensland (71 per cent), while New South Wales and Victoria placed the least importance on this (both 63 per cent).
According to the figures, 47 per cent of Australians felt property was the best investment to build wealth for retirement, while 12 per cent believed stocks and shares were the best option, and 5 per cent felt Bitcoin was the way to go.
Interestingly, that confidence in property changed with age, with 32 per cent of those aged 18 to 24 favouring investing in property for retirement, compared with 38 per cent of those aged 35 to 44 and peaking at 41 per cent for those aged 25 to 34.
South Australia led the charge here, with 56 per cent of respondents believing it was the best investment for retirement.
Turner Real Estate managing director Lachlan Turner said young buyers will still be able to negatively gear properties and use property as a wealth-creation tool, and could benefit from changes to capital gains tax.
Turner Real Estate managing director Lachlan Turner
“Looking ahead, investors wanting to expand their portfolio will still have opportunities in the new‑build market, where negative gearing will continue to apply to encourage additional rental supply,” he said.
“The Treasurer made it very clear that there was still a lot of detail to work through in the transition arrangements for CGT changes.
“Understanding more detail on these changes will be critical to help investors understand exactly how it will affect them.”
Steven Sabarre and his partner Faye Vo in their unit at Largs Bay they recently purchased. Picture: Mark Brake
Production systems administrator Faye Vo, 23, and partner, business manager Steven Sabarre, 25, have recently purchased in Largs Bay, South Australia, after a two-year journey and say it was the next step towards them building their wealth.
“Coming from an immigrant family it was a huge achievement to obtain an asset,” Ms Vo said.
“We also see it as a way of obtaining wealth in the future, and this really was a generational achievement.”
Mr Sabarre said they couple had originally wanted to buy a three or four-bedroom new build, but had changed tack as they went on.
“We’ve settled for a strata-titled unit and that’s OK with us because that will be a launchpad to what we actually want,” he said.
“There’s still safety in bricks and mortar.”
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