For some young Australians, the idea of home ownership has been shelved in lieu of lifetime renting.
WE’VE reached a tipping point.
Debate rages about Australian housing affordability, fuelled again this week by 35-year-old rich-list property developer Tim Gurner, who claimed the current crop of first home buyers need to stop complaining and start saving.
“They want to eat out every day, they want to travel to Europe every year. This generation is watching the Kardashians and thinking that’s normal. Thinking that owning a Bentley is normal, that owning a BMW is normal,” Gurner said on 60 Minutes.
PROPERTY TYCOON SAYS FIRST-HOME BUYERS HAVE UNREALISTIC EXPECTATIONS
Property experts are suggesting, however, the national obsession with universal home ownership needs to stop.
“The assumption that we’ve always had about ‘The Great Australian Dream’ — that everyone wants to have their own home — well that’s bull***, it just doesn’t happen,” said Kevin Turner, broadcaster and property commentator.
“I think we’ve got to get used to the fact that not everyone in Australia is going to be able to afford to own their own home. They’re going to be renters long-term, or they don’t want to own a home.”
Mr Turner said the rise in the ‘Generation Rent’ has also been bolstered by both a lack of affordability and compulsory superannuation.
“Superannuation in my age demographics is about having your own house,” he said.
“But now that young people are putting so much money away for their retirement — maybe they don’t need a house?”
Mr Turner said one benefit of permanently renting is you don’t need a long-term plan for being able to one day live in your dream suburb.
“One of the advantages of renting is that you get to live where you want to live straight away — you don’t have to get there through a series of moves.”
He said our cities must to adapt to the change, because we need to find a way to fit more people into less space.
“We’ve got to get more people into more square metres. So that probably is a big challenge.”
He also believes the change isn’t going to be contained to Sydney.
“I think it’s going to become more critical for Brisbane.
“I think we’re going to see good growth potential in Brisbane and I do think it’s probably going to become … not as acute (as Sydney and Melbourne) but certainly headed in that direction.”
This information is of a general nature and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.
Forced into lifetime renting
Noel Whittaker, investment adviser and commentator, said with Australia’s population forecast to hit 40 million within 40 years, he understands why young buyers would consider renting long-term.
“I must confess, I have no idea how young people on average incomes could afford a property without help from their parents.
“Of course, cheaper accommodation is available outside the capital cities but this may not suit most people because of lack of job opportunities and health facilities,” he said.
Mr Whittaker said if you analyse the figures, long-term renters can be financially better off than homeowners.
“There are many studies which show that renting is cheaper than owning, but most renters don’t invest the money they save by renting instead of buying.”
Mr Whittaker believes the long-term implication of a rent-only generation is a widening wealth chasm.
“The gap between the haves and the have-nots is continuing to increase. How can any retiree who is single cope on the full-age pension of $423 a week if they pay rent?”
Have a plan
Peter Wargent, CEO of AllenWargent Property Advisory & Buyer’s Agents, said a lifetime of renting is becoming a reality for more and more people.
“It’s not everywhere, but particularly in places like Sydney, I think home ownership rates are going to slide and I think it is becoming more of a likelihood for a lot of people.
“There’s previously been an expectation that people will aspire to own their own home and somehow there’s a feeling that renters are second-class citizens.”
He believes Brisbane will see a rise in renters long-term because property prices will continue to rise.
He says renting has its advantages, particularly with a transient population that’s crossing state borders, or even travelling overseas, to pursue their career.
“It’s a more difficult concept to be a homeowner if you move around a bit because you’re actually going to pay the stamp duty every time you move.
“More people are renting where they want to live and have an investment property to get their toehold on the property ladder.”
Mr Wargent said if the next crop of buyers choose to rent instead of own, they must be disciplined enough to ensure their superannuation is adequate come retirement.
“In theory, it’s cheaper to rent than to buy.
“One of the challenges when renting is not to spend those extra dollars you save on other things. The key really is to have a plan.”
