Australian first-home buyers face 4.5 year savings wait to buy property

Just a couple of comments on the article:

It was now taking 4.5 years to save for a 20 per cent house deposit, up from 3.7 years in the previous annual report.
This is news?:confused: So what if they start work at 19 years old and have to save for a deposit until they are 23.5 years old? Gee - a real tradgedy :p

The situation was worse in more expensive parts of Sydney, Melbourne and Perth, with first-time buyers needing to spend a decade saving up for a deposit to enter the property market in 26 local government areas.
So when did FHBs get the expectation that they should buy their first home in the "more expensive parts of Sydney"? FHBs traditionally went to the outer fringe areas where it was cheaper to get on the first rung of the property ladder.

"Our research shows a 25-year-old hoping to buy a home will be almost 30 when they actually achieve that goal," she said. "It now takes longer to save for a house that it does to complete some university degrees."
So saving a deposit can take as long as doing some study for a degree................what was the point in that statement.........so?

This reeks of Gen Y "want it now"......I guess they'll just have to face stupid reality :rolleyes:

I have to confess to not being big on saving either - it's boring and it sucks. But am I the only one who can see the opportunities to "make" a deposit rather than save for one? There are so many reno opportunities that I see every day, that anybody with even a small deposit could take advantage of and make $50-60K minimum on some deals. I offered one to a Gen Y relative the other day - it was a $100K potential profit if you lived in it while renovating (thus saving any CGT on sale).

The response I got: "When would I find time to renovate it? I play soccer Saturdays, work 6 days a week. The last thing I need when I get home from work is a paintbrush. I have to relax after teatime..........yadda yadda."

My response: "Then go to work for 6 days a week for the next 12 months to make your $100K. If you can't do this when you're young (he's 24) THEN WHEN?"
 
"Our research shows a 25-year-old hoping to buy a home will be almost 30 when they actually achieve that goal," she said. "It now takes longer to save for a house that it does to complete some university degrees."

Why start when they're 25? Why not get a part time job at 16, 18, even 20 and start saving? No one needs an iPad/iPhone/iPod/iWastemoney, no one needs a new car, no one needs to spend $100 every weekend drinking, no one needs designer clothes, no one needs professional beauty treatments every week. But this is what Gen Y do, and then expect to buy a median/above median house first up. No, no, no. Live simply, save your money and buy simple. Upgrade when your income allows you to. What a load of rubbish, I agree with Propertunity, just a Gen Y "want it now" article.
 
So when did FHBs get the expectation that they should buy their first home in the "more expensive parts of Sydney"? FHBs traditionally went to the outer fringe areas where it was cheaper to get on the first rung of the property ladder.

Completely agree. I have done this instead of waiting a further 2-3 years and live in the inner city suburbs mortgaged to the teeth, but everyone else I know seems to go 'blah blah it will take me forever to save to buy a house in X suburb which is the most expensive in the city.

There is a need to re-evaluate their expectations and realise its about growing to that point, not going from start to finish in one go.
 
From the age of 19 till 23 years of age, I saved enough for a house deposit on my own, while studying uni and working part-time for three years; then working full time for 1 year. As Propertunity says, saving takes time but it IS boring... Yet it is ultimately worth it in the end, so I have no regrets about skimping and saving on every penny during my uni years.

We bought about 10km from Sydney CBD and I have no regrets about that either, even though we could've bought our PPOR a lot further out for a lot less money... Now we are 5 mins from my family (handy for when bubs is going to arrive!) and won't have to upgrade even when we have 2 kids. So, I don't think every FHB necessarily has to start outwards and work their way up towards nicer houses. You may as well buy the best place that you can afford at the time (allowing for interest rate rises or one of you losing your jobs etc), as upgrading your PPOR can cost a lot of money.
 
Hmm, I think it's more a case of media's love of exagerating stuff than anything else. They compare the incomes to the median prices knowing that most youngsters are going for bottom-rung anyway. I bought my first place at 21 in Clarkson which was quite an undesirable area at the time, and similarly friends in Thornlie / High Wycombe.

Anyone who wants to do it does it, anyone who doesn't - cries.

Propertunity - flick that deal to me, i'll take it :)
 
From the age of 19 till 23 years of age, I saved enough for a house deposit on my own, while studying uni and working part-time for three years; then working full time for 1 year.

I did the same thing and bought at 22, it was a 30 year old unit which had been a rental for years and I think everything was original, pretty disgusting. Moved in and did it up. Even spent up to 3 hours a day travelling to/from work at one point. Many on this forum will have similiar stories, that's why we're on here talking about how we're going to buy more, and not whinging in newspapers about not being able to buy a McMansion at 21. ;)

You may as well buy the best place that you can afford at the time (allowing for interest rate rises or one of you losing your jobs etc), as upgrading your PPOR can cost a lot of money.

Good for you, and I agree, particularly for your PPOR. I think they key words there are "that you can afford". It's the people who can't afford a McMansion who want one, or those who do buy one then cry when interest rates go up, I find irritating to listen to.
 
It's the people who can't afford a McMansion who want one, or those who do buy one then cry when interest rates go up, I find irritating to listen to.

Good point.... or they want their McMansion in addition to their plasma TV and dedicated theatre/gaming room. Mind you, hubby keeps saying we should buy a cheap LCD TV, which I'm not averse to considering how BIG and HEAVY those old CRT TVs are to move... but we won't be moving again for a while so the CRT stays :D
 
What happened to the addige , ' you need to learn to walk before you can fly'.It makes me sick hearing the headline sob stories. I work with some young guys in their early twenties who take home over $1000 most weeks and live at home and they ask me how did i get to the point of owning 4 propertys and i tell them save every cent for a year or so then buy a property well within their means and continue to pour resouces in rent a room out to a friend and within 4.5 years you should have it payed off. They then look at me with sad eyes because they want to spend all their money on living for the moment. No sympathy from me ive done the hard yards and no Im on the over side now
 
Oh boy. It's just an article that says it takes longer now to save for a deposit than it did 12 months ago. Let's not read too much into this.

As Tess shows, there are plenty of young people also doing the hard yards. They are not all blowing their money on fast cars and faster women, as the tabloid press would have us believe.
 
Being a "Gen Y" young lad I have to say I'm sick and tired of hearing about how "lazy" my generation is and that we are the "want it now generation" which deserves no sympathy for struggling to enter the property market.

The facts of the matter are clear:

1) Baby boomers and Gen X had a much easier time saving for a deposit because a decent house (not a shabby apartment in a thug neighborhood) only required a 20% deposit on a much lower value. Housing in the 70's/80's was about 2-3x median household income while it is currently 7-10x depending on the subarb. Relatively, this makes housing roughly 250% more unaffordable for Gen Y.

2) Stamp duty remains as a fixed percentage of housing values. Thus my generation is forced to pay a hell of alot more stamp duty than previous generations, less of course the "whopping" assistance we get as a FHOG (give me a break).

3) University education was FREE in Australia for my parents and their parents. That is not the case today, with a typical 3-year degree from an average University costing $20,000-$25,000. Many Gen Y's are entering the workforce owing a lot more money than any other generation from day one. Even a University degree these days is hardly enough to secure a job, we're expected to have a Masters, MBA, CFA, CPA or CA. Pick your (expensive) poison.

4) Superannuation takes a slice out of the availble wealth of my generation. Do I like the Government locking up 9% (soon to be 12%) of my income and dictating when and how I can touch it? No. Compulsory super has really only been around for 10 years. Previous generations had more access to their income.

5) Baby Boomers and Gen X's have enjoyed superb wealth creation on the back of Government policy aimed to inflate property values, and generous negative-gearing tax deductions. Australia currently boasts 6 out of 10 of the developed world's most unaffordable cities, with Melbourne and Sydney specifically labelled "severely unaffordable".

6) Baby Boomers/Gen X often say that my generation should "move to the outer subarbs as a start" like they supposedly did. Right, thanks for that. You are the generations who lived comfortably inner-city near transport, and ensured that our rail infrastructure (in Melbourne) remains the same as the 1950's, and kept business concentrated in the CBD. How do you expect us to get to work? Should we drive for 1.5 hours (crawl) into the CBD and park for $16-$30 per day, then drive back for another 1.5 hours? Get serious.

Look, I'm not going to sit here and say that my generation hasn't succumbed to temptation. Of course we have, and that's going to happen as technology advances. But i'm sick of previous generations continuously dismissing the obvious added difficulty my generation faces in reaching the "Australian dream".

And believe me, there is alot of added difficulty.

(Note: Just purchased my first 2-bedroom unit in Carnegie, VIC with my fiancee after 7 years of frugal living/saving for $580,000 plus approx $17,000 in Stamp Duty after the FHOG. My parents bought their first 3-bedroom home with huge back yard and front yard, 3 streets away in 1983 for a whopping $65,000).

But of course, how dare I even mention these facts! I'm just a lazy Gen Y "want it now" type of guy.
 
But of course, how dare I even mention these facts! I'm just a lazy Gen Y "want it now" type of guy.

Good for you, you are not the sort that people get annoyed about. It's those which I pointed out earlier who do waste all their money and want the best of everything right away. I'm borderline Gen Y myself (the old end), and bought my home before many of my age, due to the fact I was prepared to buy in outer suburbs and I was prepared to live in a basic dump. Once that went up significantly and I was on a higher income, then did I move in to a nice suburb, once I could afford it. But first I got my foot in the door as soon as I could. Not all older generations grew up in ideal suburbs. My mother grew up inner city sure... Carlton, which was considered a working class less than desireable area back then. Her own first home was in the outer suburbs too as that's what they could afford.

I think some of the arguments older generations have is that it was actually harder to purchase a home. You needed 20% deposit (no 95% with LMI), no government grants, 17% interest rates at one point, often single income with Mum at home, plus they were out the door when they were 18-22 years old? Some costs of living is cheaper now, look at motor vehicles and white goods. I know my parents used to be scared of any of these breaking down because it cost a forutne to fix/replace.

These days kids live at home until sometimes into their 30's and often don't even pay board. I can not understand how many of them can not save up a decent deposit in that time. I know people of my age group who constantly waste money and then wonder why they can't afford a home or are always in debt. The ones who appreciate what I'm doing and want my help, I'm happy to give tips to, the others I just ignore. Sure his car is nice, or her nails and hair look good, but I prefer a nice balance sheet.

This topic has been done to death, I believe it's different these days, but not necessarily more difficult.
 
Being a "Gen Y" young lad I have to say I'm sick and tired of hearing about how "lazy" my generation is and that we are the "want it now generation" which deserves no sympathy for struggling to enter the property market.
To add to Biggle's comments, you are not the type of person we are talking about. You've done the hard yards - good for you.

Some of your points are very valid and others need clarification.

The facts of the matter are clear:

2) Stamp duty remains as a fixed percentage of housing values. Thus my generation is forced to pay a hell of alot more stamp duty than previous generations, less of course the "whopping" assistance we get as a FHOG (give me a break).
When I bought my first PPOR, the FHOG was $2,000 but it did not arrive until 8 months after you had purchased the home. It was commonly referred to as the FHO home improvement grant - which was what it was mostly used for. It obviously could not be used as part of your deposit.


5) Baby Boomers and Gen X's have enjoyed superb wealth creation on the back of Government policy aimed to inflate property values, and generous negative-gearing tax deductions. Australia currently boasts 6 out of 10 of the developed world's most unaffordable cities, with Melbourne and Sydney specifically labelled "severely unaffordable".
As a property owner yourself now, you can also enjoy this same thing. ;)

And believe me, there is alot of added difficulty.
I won't bore you with lots of the added difficulties that Baby Boomers had. But I do remember:
1. Housing loan interest rates were 13.5% on my first home in 1982/3 not the 7% you can get these days.
2. You had to have a 20% deposit saved - not the measley 5% you can scrape by with now.
3. Fridges/Freezers and other white goods back then were the same price as they are today - you get a lot better now for a lot less.
4. A large pizza at the newly arrived Pizza Hut used to cost $20 :eek: not the $5.95 of today

So look, things are different for every generation. There are challenges to be overcome.

You've done it! Others can too - if they can be bothered.

Life can be fun :)
Sorry if I came across like this:
http://www.youtube.com/watch?v=Xe1a1wHxTyo
 
Being a "Gen Y" young lad I have to say I'm sick and tired of hearing about how "lazy" my generation is and that we are the "want it now generation" which deserves no sympathy for struggling to enter the property market.

The facts of the matter are clear:

1) Baby boomers and Gen X had a much easier time saving for a deposit because a decent house (not a shabby apartment in a thug neighborhood) only required a 20% deposit on a much lower value. Housing in the 70's/80's was about 2-3x median household income while it is currently 7-10x depending on the subarb. Relatively, this makes housing roughly 250% more unaffordable for Gen Y.

2) Stamp duty remains as a fixed percentage of housing values. Thus my generation is forced to pay a hell of alot more stamp duty than previous generations, less of course the "whopping" assistance we get as a FHOG (give me a break).

3) University education was FREE in Australia for my parents and their parents. That is not the case today, with a typical 3-year degree from an average University costing $20,000-$25,000. Many Gen Y's are entering the workforce owing a lot more money than any other generation from day one. Even a University degree these days is hardly enough to secure a job, we're expected to have a Masters, MBA, CFA, CPA or CA. Pick your (expensive) poison.

4) Superannuation takes a slice out of the availble wealth of my generation. Do I like the Government locking up 9% (soon to be 12%) of my income and dictating when and how I can touch it? No. Compulsory super has really only been around for 10 years. Previous generations had more access to their income.

5) Baby Boomers and Gen X's have enjoyed superb wealth creation on the back of Government policy aimed to inflate property values, and generous negative-gearing tax deductions. Australia currently boasts 6 out of 10 of the developed world's most unaffordable cities, with Melbourne and Sydney specifically labelled "severely unaffordable".

6) Baby Boomers/Gen X often say that my generation should "move to the outer subarbs as a start" like they supposedly did. Right, thanks for that. You are the generations who lived comfortably inner-city near transport, and ensured that our rail infrastructure (in Melbourne) remains the same as the 1950's, and kept business concentrated in the CBD. How do you expect us to get to work? Should we drive for 1.5 hours (crawl) into the CBD and park for $16-$30 per day, then drive back for another 1.5 hours? Get serious.

Look, I'm not going to sit here and say that my generation hasn't succumbed to temptation. Of course we have, and that's going to happen as technology advances. But i'm sick of previous generations continuously dismissing the obvious added difficulty my generation faces in reaching the "Australian dream".

And believe me, there is alot of added difficulty.

(Note: Just purchased my first 2-bedroom unit in Carnegie, VIC with my fiancee after 7 years of frugal living/saving for $580,000 plus approx $17,000 in Stamp Duty after the FHOG. My parents bought their first 3-bedroom home with huge back yard and front yard, 3 streets away in 1983 for a whopping $65,000).

But of course, how dare I even mention these facts! I'm just a lazy Gen Y "want it now" type of guy.
Let me tell you , im a low to medium payg blue collar worker and the gov never gave me a handout in 1995, infact i had to buy regionaly because i couldnt afford sydney's eastern subs wich i grew up in , not even a 1bdroom unit. so i payed for shared accomm adation worked nightshift , rode my bike 15kms per day in rain and shine , mid winter and saw no rewards until 2002. I have since been able to buy and sell to make enough money to slowly move into where i would like to live . And guess what its still not where i grew up but its close enough. The fact is if i had nothing today , me and my partner would still be able to save about $45-$50,000 per year to obtain our goal of a home, be it a compromise of location
 
Fact:

We bought our first home in 1974 - yes, I am one of the much-maligned baby boomers.

If you wanted a loan from a savings bank (best interest rate), you needed a third deposit. Actually it was 35% as the bank would only lend 65% of the combined house and land value. Home loans were capped at $12,500 at that rate. If you wanted to borrow more, you had to take out a second mortgage with a trading bank (different arm of the same bank) at a higher interest rate.

You had to have an "established relationship" with the bank or they would not let you in to the office to discuss the loan. No shopping around, if you had not dealt with the bank for a few years you had no chance.

Then, you had to grovel to the bank manager. If he (it was ALWAYS a he) did not like the look of you, he said no and that was the end of that.

As a last resort there were finance companies. Higher interest rates, often 3% or more higher.

Yes, I lived through the dreaded 17% mortgage rates, though the highest I paid was 16% (on an IP).

The "inner suburbs" you say your parents live in were the "outer suburbs" at that time.

Our first VCR, a basic model, cost us $1,200. Yes, that is around 25-30 years ago so in today's values would be far higher. Other white goods were priced far higher than today's prices. We started our with a second hand fridge and a hired TV. In 1972 we paid $250 for a new Hoover twin tub washing machine.

And no cheap imports. Clothing was expensive - I would put a new dress on lay-by and pay it off over 5-6 weeks.

So please don't whinge that we had it easier.

We didn't.

So, as the saying goes, take a teaspoon of cement and harden up.

Otherwise I'll start to grumble about the beachfront blocks in Surfers Paradise that my grandparents could have (SHOULD HAVE) bought for ten pounds ($20).......
Marg
 
Again im with marg, my first purchase was a block of land, it cost $36000. I had $6000 and the bank manager said come back with $8000 and we will lend you the money . Did i give up , no i said to myself i can work weekends etc and in 2months ill have the money. Trust me knowing what ive been thru, i could easily cope with todays enviroment, knowing the gov will chip in
 
This topic tends to polarise the SS community, I've noticed!

Was reading the equivalent article in today's SMH (6 years in Sydney to save a deposit...)
http://smh.domain.com.au/real-estat...t-for-first-home-in-sydney-20100705-zxlg.html

Interestingly enough, the figures being bandied around (4.5 years nationally; 6 years for Sydney) are for buying median-priced houses ... in Sydney, that's a $600 k house!!
(http://www.myrp.com.au/sydney_house_prices.do)

Median house price doesn't necessarily equate to what FHBs are buying...
 
Marg, I don't think dancitron is saying you had it easier, he/she is trying to debunk the common myth around here that Gen Y are looking for the easy way out. And are Boomers that maligned?

I think each generation has it's different challenges, and each has it's individual hardships. My dad tells me I have it easy, he had to walk 5 miles to school with each hand up a sheeps bum, because his parents were too poor to afford gloves......
 
Marg, I don't think dancitron is saying you had it easier, he/she is trying to debunk the common myth around here that Gen Y are looking for the easy way out. And are Boomers that maligned?

I think each generation has it's different challenges, and each has it's individual hardships. My dad tells me I have it easy, he had to walk 5 miles to school with each hand up a sheeps bum, because his parents were too poor to afford gloves......

Thanks for bringing a balanced veiw, I for one got my back up and I appolagise. WHat we "accomplished labourers"should be doing, is encouraging the next generation, DONT LISTEN TO THE TABLOIDS, its not that hard
 
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