Save for a deposit, buy your family home, spend the next 30 years paying it off – Sound familiar? It's a rite of passage most of us were born into, an expectation handed down from generation to generation like great grandma Edna's fine china. These days, however, the playing field has changed, with the property price to income ratio higher than it has ever been before (particularly in Sydney). This has left Gen-Y to ponder the question "Is it all really worth it?" and in turn, "Is there a better and more practical way to climb the property ladder?". The answer, it seems, is yes.
A survey earlier this year stated that Sydney was the second least affordable city in the world, with only Hong Kong ahead of it. With results such as this, it's no suprise that it is harder than ever for young people to get a foot in the property market, with an alarming 80 per cent of first home buyers believing they simply can't afford to buy their own home.
With large increases in property prices in many capitals including Sydney and Melbourne recently, we've seen this affordability fall even lower, despite interest rates currently sitting at historic lows. And even for those who have been fortunate enough to gather the required deposit, they are quickly discovering that their money buys them less than they hoped in these expensive markets. Thus, they are forced to make large sacrifices on quality, and more importantly location, resulting in less than the "Dream Home" they had envisioned.
Whilst attempting to gather the roughly $100,000 deposit to buy property in the Sydney market can often seem like a far too big mountain to climb, Generation Y have cottoned on to an alternative that has far less impact on their all important lifestyles, while still allowing them to reap the benefits of capital growth.
They're finding that acquiring $30,000 - $40,000 to get into a smart investment property instead is far more achievable for obvious reasons. This, coupled with Sydney and Melbourne's famously low rental yields allows them to still live where they want to live, without the weight of an enormous mortgage.
Often this approach gets some momentum for first time investors... plus the difference of maintaining the rent and owning a 'cashflow positive' investment property allows them to still have the lifestyle they wish.
This is supported by a recent survey by Mortgage Choice which uncovered that approximately 33 per cent of investors in 2016 were actually first-time buyers who did not own their principle place of residence.
In other words, they are having their cake and eating it too... while in the process showing a large generational shift, and possibly turning Gen-Y into Generation R(enters) in the process.
Gen-X have generally had a single minded vision on the need to own their own home, and have often historically paid the price by struggling to make repayments and reducing their lifestyle options in the process.
From the information we are seeing now, it appears that Gen-Y have other ideas. Many are aiming to buy a rental property first (sometimes even two or three) until they are really settled and often when their investment properties can easily provide the ability to secure their dream family home.
And the advantages of this are clear, with less financial burden, the ability to keep the lifestyle they desire, the opportunity to still achieve capital growth, along with some added tax benefits just to sweeten the deal.
This approach may not be for everyone, with many still maintaining the notion that ownership of the family home comes first... no matter what the consequence.