Misc,  Real Estate

The Evolving Great Australian Dream

Reading Time: 6 minutes 

Ah yes, the Great Australian Dream.

What is it you ask?

Well, since the beginning of time, us Aussies – we’ve got this fascination, no, not the right word, this need of owning our own home. The insatiable desire for the quarter acre block and a piece of land we can call our own.

I’ve discussed it previously in some of the earlier blog posts (here and here) regarding our attitude to real estate.

Not only does the property market provide housing to all of us – it is also an enormous asset class which dominates the media airwaves and creates a huge number of jobs.

Image result for bob the builder
“Hi, I’m Bob – thanks for keeping me employed”.

Which is why the latest report from renowned broker Mortgage Choice makes for some pretty insightful reading.

They surveyed 1,000 Australians to bring out a pretty detailed whitepaper and investigation which details our current thoughts on a) getting into the market and b) ways in which we do so.

Their findings are pretty interesting:

  • Shifting attitude towards apartments
    • 18% of respondents believe lifestyle is the number one consideration of which property to buy.
    • 29% will not consign the previously held dream of a free-standing house.
    • However 62% believe that an apartment does not carry the same sense of “home” as a free-standing house (suggesting that homes are still very much preferred).
  • How people are getting into property
    • 78% identified savings, term deposit accounts and reduced savings as key strategies (bread and butter approach).
    • 5% used a guarantor e.g. parents to assist in purchasing their first home.
    • 32% identified they will need to pay Lender’s Mortgage Insurance (insurance that protects the lender if you don’t have enough deposit) in order to get in.
  • Finances overall
    • Only 15% strongly agree there is enough savings for a rainy day.
    • 11% strongly agree their spending is out of control sometimes.
    • 65% stated they do not feel financially secure for the future.

Here is their infographic:

The Evolving Great Australian Dream 2018 Infographic

It doesn’t really make for pleasant reading does it?

What is further interesting to note is that the shift towards apartments is becoming more and more noticeable given their reduced entry points and (usually) closer proximity to lifestyle amenities.

This is a result of how we perceive free-standing homes as beyond the reach of most (if you live in Sydney and Melbourne you’ll know what I mean)… BUT we still hanker for the sense of “home” that a house brings.

We also are more engaged and willing to learn about property but this has caused us to worry more and more about increasing interest rates (mainly from the “noise” the media so often perpetuates).

We also dislike renovating and auctions… but go ahead with them anyway.

Geez Laweez – it reminds me of the classic:

Image result for simpsons that's good that's bad gif
Apartments aye…
Related image
But there’s no sense of home…

So what can we do about it?

There are some ways we can go about this to ensure that we can get a leg up onto the property ladder:

  1. Apartments over houses – as you saw in the infographic, there is a shift towards apartments given the lower cost and better locations. Although not quite the same as living in a big, suburban house – it does offer a way in.
  2. Slowly upgrading – your first home doesn’t have to be your “forever” home, many of our parents could not afford their dream home first either – instead they slowly upgraded into bigger and better properties through each cycle.
  3. Living out wide – this usually means that when we are younger we have to sacrifice location to being in the outer suburbs, as properties tend to be more affordable out wide. Not ideal but again, it’s a way to get in.
  4. Move back in with parents – if you’re a bit cash-strapped and have a good relationship, why not continue or move back in with your parents? Money saved is money saved, and it can go towards that next deposit.
  5. Rentvesting – it’s a term popularized recently as a means for many younger buyers to get a foot on the ladder. By renting where you want to live and investing where you can afford. This is because usually the costs of entry for a desired lifestyle location is too high to get in. But investing in a lower price point allows equity and cashflow to be built up.

Fact is that no matter who you talk to, buying property has never been easy, ever.

If it was easy, you would not be spending hundreds of thousands of dollars and paying a shitload of interest on top!

But hopefully these insights from Mortgage Choice can provide us all a bit more clarity regarding “The Great Australian Dream”.

Damn interesting stuff!

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