There has been much debate about housing affordability recently, specifically focused on the millennial generation’s perceived inability to enter the property market while still being able to live the comfortable lifestyle they have grown accustomed to. While that debate makes for catchy headlines, lets take a look at why this generation can literally have their smashed avocado and their property portfolio too.
This debate gained momentum (or at least added personality) with social commenter Bernard Salt’s recent article outlining that expensive breakfast choices were the real hurdle in the path of young home buyers, not property prices.
There may be some truth to the thought that living standards have changed considerably over the years, but it also can’t be ignored that the percentage of weekly income attributed to housing has increased over time. The Australian Bureau of Statistics’ (ABS) Household Expenditure Survey tells us that the estimated average proportion of weekly household expenditure currently spent on housing increased from approximately 12.8 percent to 18 percent.
Those living in Sydney and Melbourne in particular would not argue with this, but what about the rest of the country? You may be surprised to learn that the effort, time and most importantly money needed to save for a deposit in Sydney and Melbourne is up to 3 times more than what is required in other capital cities.
Looking at the numbers above it makes more and more sense for those living in Sydney and Melbourne who are looking to enter (or re-enter) the property market to look interstate for their property needs, with the rationale of renting and then investing becoming a preferred methodology.
In addition, with Melbourne and Sydney being the two worst yielding capital cities in the country (in that order) higher yielding properties interstate can actually assist in lowering an existing mortgage on a family home whilst legally lowering your taxable income. Multi-Generational families are increasingly looking at ways of how they can leverage existing wealth to assist the next generation in a variety of different ways.
The way that we all look at property is changing, as is the way we look at the future and how we plan to cope with the financial challenges that lay ahead.
If you’re looking to enter the market for the first time, or looking at ways take advantage of new found equity and use it to your best advantage, then register for my up coming complimentary live event focusing on real strategies that allows you to enter the property market sooner, smarter and more profitably. Click the banner below to register for my next event now.