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There is no doubt house price to salary ratio was lower in the 70s and 80s – often seen as an unfair advantage for baby boomers. On the other hand interest rates by the late 80s were at times crippling – who remembers 17%?
Anyone who rode out 17% interest rates probably thought they would NEVER pay off their home. But they DO. And they DID. Historically, property prices usually rise over time. Surprisingly most home owners end up coping with market fluctuations, bringing up children and still doing okay.
As you can see, even with a significantly lower average mortgage in 1990 home owners weren’t much better off while interest rates were high.
In 2016 we earn much more but other lifestyle factors have also changed. Finance is more readily available – how many of us now have credit cards?
We’ve also moved on from a society that generally lived within their means. We no longer save or lay by – it’s often easier and more instantly gratifying to charge to a credit card!
Household mortgage debt has tripled in the last 25 years. One survey links the trend of increasing debt to the introduction of mortgage packages that allow homeowners to draw down on their mortgage without having to sell their house 3. While this facility can be a helpful low interest way of accessing finance it can also increase the level of debt for those who don’t use it with care.
So what is the ‘home ownership’ message from all of this? Well, the road hasn’t ever been easy. In fact…
Building wealth and financial security through property investment has ALWAYS required a level of sacrifice and self-discipline. Current home ownership statistics show 31% of Australians rent, 36% have a mortgage and 33% own their home outright 4. Those who benefitted over time are those who put a strategy in place and had the discipline to stick with it.
Recent research 5 shows Gen Y is the new generation of FHBs and they are starting to actively enter the market. We are also seeing the rise of the ‘rent investor’ – young renters under 30 purchasing investment properties in affordable areas while renting where they WANT to live.
So yes, it appears there IS hope for FHBs.
Do you want to be one of them?
Buying a property takes preparation and planning – sometimes for years. So what can you do NOW to help you buy a home in the future? Here are our top tips:
1. Research the market NOW and plan your goal
2. Work hard at saving a deposit
3. Pay your bills on time
4. Eliminate debt
Travel, good times and job-hopping have been the typical lifestyle choices of Gen Y but this generation is evolving. PREPARATION and PLANNING are essential to getting a foot on the property ladder along with reining in extravagant living and our penchant for instant gratification.
With a little sacrifice and self-discipline it may be more possible than you think for our younger generations to afford property. It may be even MORE affordable for Gen Y because there are possibly TWO salary earners to buy the first property – unlike back in the 70s. Let’s prove the doomsayers WRONG and take responsibility for our future!
3. Bankwest Curtin Economics Centre
Watch the video testimonial of Andrew and Karene
And if you had a win – well how LUCKY was that! However, when it comes to our retirement, the amount of funds we require to GO THE DISTANCE is best NOT left to chance! Are you hoping for a comfortable lifestyle in retirement? If so, have you started planning for that lifestyle, or are […]
Are you one of them? A recent survey of Australian mortgage holders found 45% had NEVER refinanced their home 1. The report also found customers who DID refinance saved an average of $240 per month ($2,880 pa) by refinancing a 30 year loan. What would YOU do with an extra $240 each month? Why […]
Are you a member of one of the fastest growing demographic groups: the Sandwich Generation? Well you’re not alone. And the sandwich is growing! One notable authority on the subject has categorised three demographic groups affected by this issue: So it’s an issue that can potentially affect anyone from 30 years+. The ramifications can be […]
The new generation is knocking at the door. If we believe research and the media, Generation Y is seen as being far more interested in an indulgent lifestyle than mortgages. Well guess what? The oldest Gen Ys are now turning 35 – and they are the NEW generation of first home buyers (FHBs). According […]
Did you read our quarterly question in this issue? 48% of our survey respondents have an investment property! That’s music to a finance specialist’s ears – it’s satisfying to hear those people have a financial strategy that could lead to a more comfortable retirement. 66% of respondents also said they are worried about having […]
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After what seems like a long period of saving money, you decide to put it towards an investment. You approach your financial planner and propose the idea of investing in a property. The financial planner is hesitant and suggests that it’s not a good idea. Should you find yourself in this scenario, it’s no reason […]
Sydney's property market was the strongest, helping to deliver the strongest year of national capital city prices since 2009. House values rose by 14.5 per cent in Sydney in 2013, pushing the city's median dwelling price to $655,250, according to the RP Data-Rismark December Home Value Index. Perth was the second best performer, with an […]
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Capital city home values have increased by 5.3% over the 12 months to August 2013 however, unit values have risen by just 3.2% compared to a 5.6% increase in house values. Units offer a more affordable price point at which to enter the housing market. Not only are they more affordable, they are often most […]
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