FYI gen X ers and property

From: Michael Croft


Gen X destined to rent forever
By Iain Payten
February 11, 2002

INSECURITY in the workplace and the rising cost of living are forcing growing numbers of Generation X to abandon hope of buying a home, a study has found.

The number of people aged between 24 and 34 buying homes has fallen by 10 per cent over the past two decades, according to a report by the research group Committee for Economic Development of Australia (CEDA).

Reliance on private rentals has "increased enormously" – the product of a marked shift in the labour market from a climate of stability to one of risk and uncertainty.

"The 24 to 34-year-old age group – which we regard as a very good barometer of today's social environment – are hitting a very different labour market in terms of increased precariousness," said Linda Hancock, co-editor of the CEDA report.

"We have one of the highest rates of non-standard work (casual, part-time or unstable tenure) in the world."

Dr Hancock said growing numbers of professionals, entering the workforce at a later stage due to more extended education, were finding it difficult to save for a deposit while paying high rents in the inflated rental market.

"Particularly with substantial HECS debts, they then find themselves unable to bridge the gap to coming up with a deposit for buying a home. They feel like there is no option available," she said.

The chain of marriage, birth of the first child and entry into home ownership that characterised previous generations has been broken, the report says. Increased social risk has created a prevailing attitude of uncertainty about "what will come next".

"If we don't change things pretty quickly, they are not going to have the income to be self-supporting, they are not going to have the housing that they can hedge against poverty and old age, and they are not going to be in a position to pay into super because a lot of them will be in precarious work that doesn't have it," Dr Hancock said.

She said the Government's first home-buyers grant (initially $7000, then rising to $14,000) had been a "disastrous" lure for people to enter the property market prematurely. The grant's recipients were now at the mercy of interest-rate increases.

Solutions to the problem should include a focus on creating more full-time employment, she said.
 
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Reply: 1
From: Duncan M


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Hi Michael,

Interesting post!

The article references "Rising Cost of Living".. a thought that has occurred
to me a few times over the last few years is that the Cost of Living is NOT
rising but the range of areas that expenditure is becoming more common is
increasing dramatically, these expenditures are moving into the parlance of
"cost of living", the last 20 yrs has seen the following things invented and
or become must haves for a lot of Gen Xers.


- Videos and the idea of hiring Videos on the weekends.
- Mobile Phones (on credit as well!)
- Pay Television (with 'contracts')
- Internet Access (many dollars per month)
- Health Insurance "extras"
- HECS
- DVD's
- Expensive Car Audio Equipment
- Big Screen TV's.
- Home Theatre
- Proliferation of various interest free deals for
Consumer items.
- Pre-cooked meals at the supermarket
- Salad Bar's at the supermarket
- Proliferation of Poker Machines
- Trendy and very exxy sunglasses
- Overseas travel has skyrocketed
- Designer footwear (sports shoes)
- Video Game Consoles
- Proliferation of Credit Cards.
- Proliferation of Store Accounts

The list goes on.. I'm sure at any point in history you could identify a
similar list but it seems the last 20yrs has seen a real explosion in things
that people are willing to spend their money on, Gen X'ers are getting into
the habit at a very young age of having a rented lifestyle.

This is indeed all good news for the rental market.

Duncan





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Hi Michael,


Interesting post!


The article references "Rising Cost of =Living".. a thought that has occurred to me a few times over the =last few years is that the Cost of Living is NOT rising but the range =of areas that expenditure is becoming more common is increasing =dramatically, these expenditures are moving into the parlance of ="cost of living", the last 20 yrs has seen the following =things invented and or become must haves for a lot of Gen =Xers.


- Videos and the idea of hiring Videos on the =weekends.
- Mobile Phones (on credit as well!)
- Pay Television (with 'contracts')
- Internet Access (many dollars per month)
- Health Insurance "extras"
- HECS
- DVD's
- Expensive Car Audio Equipment
- Big Screen TV's.
- Home Theatre
- Proliferation of various interest free deals =for
Consumer items.
- Pre-cooked meals at the supermarket
- Salad Bar's at the supermarket
- Proliferation of Poker Machines
- Trendy and very exxy sunglasses
- Overseas travel has skyrocketed
- Designer footwear (sports shoes)
- Video Game Consoles
- Proliferation of Credit Cards.
- Proliferation of Store Accounts


The list goes on.. I'm sure at any point in history =you could identify a similar list but it seems the last 20yrs has seen =a real explosion in things that people are willing to spend their money =on, Gen X'ers are getting into the habit at a very young age of having =a rented lifestyle.

This is indeed all good news for the rental =market.


Duncan







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Reply: 2
From: J Parker


Interesting article there Michael.
Did you also see the two articles in this week's SMH about rents increasing and furnished apartments being sought after?!

I have to agree with there being more singles out there who don't want to commit to a mortgage. Last Friday I was at Balmoral Beach (Sydney) and noticed an absolute glut of singles sunning themselves on the beach- with nought but their swimmers, towel and reading material. Oh, if only!! I had my time, short though it was...

I guess, as more and more single people take on transient jobs and stay childless, then higher disposable incomes are there for the spending. Hey, I'm not complaining if they want to spend it on renting!

Cheers, Jacque :)
 
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Reply: 2.1
From: Michael Croft


Thing I've noticed also is that the expectations are that those leaving home expect an ensuite bathroom, garage, dishwasher and all other mod cons that took their folks 20 years to get. They want it all and right now, and will forego the pleasures of a mortgage (but go into hock) to achieve it.

Michael Croft
 
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Reply: 2.2
From: Mark Laszczuk


Translation of article from a Gen Xer:
People in the 24 - 34 year age group cannot save for a house because they spend all their money on their lifestyle. Simple. I can't believe some of the conversations I hear from people in my age group:
'Need to buy a DVD player.'
'Need to buy a new car stereo'
'Need to go on a holiday'
'Need to buy this'
'Need to buy that'
It's always 'need', never 'want'.
One person I work with even told me that her and her husband had to sell one of their rental properties "Because they couldn't afford to keep it". Oh, nearly forgot: they own two cars, lots of the latest gadgets, and just went away on holidays. Go figure.
Mine and my partners conversations always go like this:
'Well, would really like a DVD player/new computer/whatever, but saving for our future is of a higher priority at this point. We can have all those things and more later on when we're retired and can afford them.'
It's all just a matter of priority. We even go so far as planning ahead and saving a little each payday if we want to go out for dinner.

Mark
'no hat, some cattle'
 
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Reply: 2.2.1
From: Sergey Golovin


This is only one side of the coin, latest toys and the other one is -

In Italy people are not concern with building dream house like we do in Australia, they do not spend all their spare time on construction sides, it is already build by previous generations, 2000 years ago.

All their income they spend on designer close, meal and latest toys.

It does not make Italy any poorer then us does it?

Serge.
 
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Reply: 2.2.1.1
From: Michael G


Sergy,

Have a look at the exchange rate of the lira when it existed !

Michael G
 
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Reply: 2.2.1.2
From: Duncan M


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I'm curious, whilst they may be living rent/mortgage free in a 2000yo mud
shack.. what do they buy food with when they stop working?

Duncan


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I'm curious, whilst they may be living rent/mortgage =free in a 2000yo mud shack.. what do they buy food with when they stop =working?

Duncan




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Reply: 2.2.1.2.1
From: Glenn Mott


I have had this conversation with people (including my wife) on more than 1 occasion and my final answer is ...

A need and a want are 2 very different things.

Cash going into my pocket is good
Cash going out of my pocket is bad

Regards

Zen Master Glenn
 
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Reply: 2.2.1.2.1.1
From: J Parker


I'm with Jan- when I finally get rid of my tired old lounge (and believe me when I tell you that it's seen much better days) I know that I'll be in a very good position, financially.
I get more excited reading Domain every Sat than I do about the prospect of buying a new gadget..
Sad but true!
Cheers, Jacque :)
 
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Reply: 3
From: Duncan M


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This story has raised its head on the ABC News site as well, Students Union
bowing in:

http://www.abc.net.au/news/justin/nat/newsnat-11feb2002-62.htm

Duncan

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This story has raised its head on the ABC News site =as well, Students Union bowing in:


http://www.abc.net.au/news/justin/nat/newsnat-11feb200=2-62.htm


Duncan




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Reply: 4
From: Simon St John


Whilst the Italians (and Greeks, etc.) over there are buying designer this-and-that the Italians here are scrimping and saving to buy multiple houses.

My friend Sophies' Dad did just that. Life wasn't much chop in his 2000 year old mud shack so he came here and built a life.

You'd never know it when you see him driving to the market every morning in a beat up Holden for the supplies for his milk bar in South Melbourne but he now as 12 properties fully paid off!

I'm sure many of us know such stories.

Perhaps some of the Gen Xers could do with starting from scratch (or losing it all as I did once!).

It's like Michael says, they expect the things their parents worked 20 years + to get - and more!

In the end, you wonder what they plan to live on when they retire and WE can't afford to keep them.

Simon
 
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Reply: 4.1
From: Sergey Golovin


I do not want to get into it too much; it is going to be another brawl.

All I am saying in general terms - very same money that can be used somewhere else we have to allocate to build up country (roads, bridges, buildings, etc), not only money but time as well. This why we have to pay so much taxes. 200 years ago this continent was empty – infrastructure wise ofcourse. Well, have look now. Where did it come from? Simply someone build it. People like you and me.
Put it otherwise - Japanese society worked their asses off to build their country up and when new generation came along they started consume fruits of their forefathers labour to full extend. And why not, after all, this is what it was built for.

I'm not talking about individual cases; it is not enough time for individual stories (even they are so interesting) to post on this forum. Not enough space to post every man and woman personal achievements. In the library perhaps yes, but not on the forum.

It is like family on sense - first generation working very hard on the factories and next generation goes into art.

After all, what's new?
But what is new for Australian society is that we seems to have got to that point that young generation can allow them selves to be less concerned about shelter above their heads or something, I do not know. Something has changed, but what? Is it financial or social, physical or moral?
Sorry folks I’m not scientist. I’m straggling to understand what is going on very same way as you do.

Serge.
 
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Reply: 4.1.1
From: Jas


Radio National interviewed one of the contributors to this report. It
was a professor at Monash Uni. She said the solution could be for
developers to start creating 'rent to mortgage' schemes.

The developers would build a community, then people would rent it for a
few years, then they would choose to buy. It seems that wrapping might
get the official nod in a few years time.

On the other hand, it could easily turn into private re-creating of the
grottos that dept of housing is now desperately trying to get rid of...
Apparently there's a pilot scheme along these lines somewhere in
Australia right now.

Jas
 
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