One of the defining trends of our time may be loss of the Australian dream of owning a home, according to new studies. But before we despair, we should understand why the younger generation has the bad luck, and what would-be Gen Y home owners can do to improve their chances of getting a foot on the property ladder.
One of the startling findings is that by the time you retire, you only have a one-in-40 chance of being mortgage-free, and a 90 percent chance of not being able to afford to repay it, according to studies from the Australian Housing and Urban Research Institute (AHURI).
The next time mum and dad tell you that you’re simply not working hard enough for a home loan, remind them that their generation definitely had it easier. That’s because in the 1970s and 1980s, saving for deposit for a median-priced dwelling required about twice the average annual income at the time. These days, the deposit gap is at least four times the income of those on average earnings, according to the study.
How will you cope?
Resi CEO Lisa Montgomery says that the younger generations will adapt to housing challenges by downsizing or finding support from their family and friends.
“Data shows that young adults are staying in the family home significantly longer,” she told news.com.au.
“Many young Australians are buying their first property with family members or friends; we are also seeing a trend emerging of the first property being an investment rather than a home to live in.”
It’s more important than ever to make sure you can afford your home loan. Always shop around online for the lowest rates, and consider cutting costs or saving for a few more years before you buy.
Another alternative is to buy a home with your nest egg when you retire, and while that may seem like a long wait, the prospect of struggling to pay a home loan on a pension is a nightmare that every person chasing the Australian dream will need to wake up to.