This has been a question circling newspaper headlines recently, and it’s raised some passionate debate among property commentators, Millennials and Baby Boomers. But as time goes on the question may alter itself from “Should” Gen Y ever buy, “Can” they ever buy? I believe the answer to both is still yes, but it may not be what you think.
Just like many of our readers, I am a member of Gen X with a couple of Millennials running around the house. Our situation isn’t a typical one, but I must admit the question I’ve asked myself many times is what kind of property environment my children will grow into.
One in three parent couples help their children enter the property market with a deposit, but with real estate at an all time high in Sydney this is no longer the “given” that it once was for some families. With the latest lending restrictions being placed on potential home owners by the big banks, even helping the next generation into a modest unit may require as much as $125,000 deposit.
Understandably this can be an impossible figure for parents (or anyone for that matter) to muster, and this is a trend that isn’t showing any signs of weakening in the near future.
A mindset shift is required, as their are alternatives that can vastly reduce this burden, while still allowing your kin to reap the benefits of the Australian Property Markets. This, as well as how to reduce your mortgage and tax man obligations as much as possible is the focus of my final live seminars for 2016.
I still hear of many baby boomer parents vigorously encouraging their youngsters to rush out and get into the market “before it’s too late”. The lowest interest rates in history, as well as recent proof of how property prices can work in an owners favour can be all the evidence Mum and Dads need to make this recommendation.
And while I agree that these low interest rates on offer need to be capitalised upon, I’m not sure that jumping in at the peak of a market to enforce long term financial strain is the best way forward.
But finding a way to enter a safe and reliable market at a lower price point, still obtaining good a capital growth while you continue to rent may be a good alternative.
While renting can often been labelled as “dead money” (and I can understand why) it can be an affordable alternative providing your money is working for you elsewhere. The fact is that in Sydney rents are around the lowest they’ve ever been comparatively speaking. When placed next to purchase prices renting appears more affordable than ever,
There are still good quality investment locations offering strong rental yields, and along with depreciation and tax offsets create an environment where your investment can cover it’s costs, while you live more cheaply in your desired location.
That all sounds very easy, and I don’t meant to paint a simplistic picture as no matter what direction Gen Y goes in one thing is for certain… they will need to do more due diligence and research on their decision than any other generation before them.
For this reason we believe it’s our obligation to hold regular seminars informing property owners and investors of the changes in market conditions. Our final dates for 2016 are fast approaching, so please come along to one of these complimentary information evenings located near you. Seats are limited, so to reserve your spot, click here now.