Gen Y changes mind­set

Herald Sun - Property - - COVER STORY - PETER FARAGO AND MICHELLE HELE

AN­THONY Rondinelli is a young man with a plan.

With his par­ents’ bless­ing, he’s still liv­ing at home at Reser­voir af­ter re­cently en­ter­ing the prop­erty mar­ket to buy an in­vest­ment prop­erty nearby for $338,000.

His goals are clear. Use the in­come from the rental and his job as a plum­ber to pay down the debt and save for a new de­posit on a home to live in.

But the 25-year-old’s story could be­come in­creas­ingly rare as a gen­er­a­tion shuns home own­er­ship to live for the mo­ment. As a re­sult, the Aus­tralian rental mar­ket may be about to un­dergo a dra­matic trans­for­ma­tion to cope with an in­flux of life­time renters.

Quan­tum Mar­ket Re­search man­ag­ing di­rec­tor Imo­gen Ran­dell said with more peo­ple choos­ing or be­ing forced to rent, Aus­tralia needed to look at how it op­er­ated its rental mar­ket.

“You can­not get a long-term lease and this is ridicu­lous,’’ Ms Ran­dell said.

“We (have not) ad­dressed this idea of you need a longterm lease if you are go­ing to build a life where you know you are go­ing to rent.

“There are go­ing to be a group of peo­ple who are not able to af­ford to se­cure prop­erty for what­ever rea­son, and un­less you look at state hous­ing there are not long-term leases for pri­vate rental hous­ing like there are in Europe.’’

Ms Ran­dell said high lev­els of per­sonal debt, un­cer­tain em­ploy­ment prospects and ris­ing costs of liv­ing were keep­ing many out of the prop­erty mar­ket.

While many mem­bers of Gen­er­a­tion Y still as­pired to buy prop­erty at some time in their life, Ms Ran­dell said it was some­thing they wouldn’t achieve un­til much later than their par­ents did. The num­ber of first-time bor­row­ers in the mar­ket was 14,000 less last year than it was 10 years ago, while at the same time the num­ber of stu­dents with a higher ed­u­ca­tion debt al­most dou­bled with the av­er­age debt up from $10,100 in 2005 to $18,100.

“There are go­ing to be peo­ple that down­size once they re­tire with­out hav­ing fully paid off any of the prop­erty they have lived in,’’ Ms Ran­dell said.

She said some young peo­ple were not pre­pared to sac­ri­fice every­thing to buy a home.

“I think they are liv­ing that du­al­ity where they will put aside sav­ings for a house but they won’t com­prise also hav­ing an over­seas trip or a new car.

“Gone are the days when you spent $1500 on a car and strung it to­gether for your 20s.’’

Over­seas hol­i­days, smart phones and data plans and a higher cost of liv­ing all dented their sav­ings plans.

Mr Rondinelli baulked at a three-month over­seas hol­i­day with mates when sav­ing his de­posit.

“I had saved up $50,000 for the de­posit at that stage. It would have been go to Europe for three months and spend $30,000., so I made the de­ci­sion not to go,” he said.

“I’m 25 but I still see my­self stay­ing at home for a few more years and hope­fully I can af­ford a house in a cou­ple more years.”

Ac­cord­ing to Aus­tralian Bureau of Statis­tics fig­ures, the amount first-home buy­ers bor­rowed in­creased in the past 10 years by $126,000 to $339,100. That means it can take more than 10 years to save for a de­posit, which in Mel­bourne can be at least $56,000.

Mum Maria Rondinelli said her son was wel­come to stay at home as long as he wanted.

“Euro­peans try and help their chil­dren so they get es­tab­lished,” she said.

“We worked from a young age but now th­ese kids go to school un­til they’re 21, so by the time they’ve fin­ished their ap­pren­tice­ship or they fin­ish their univer­sity, if they move out, they don’t have a chance to buy a prop­erty be­cause they have to pay their rent, their food and every­thing else.”

Mrs Rondinelli said it was more dif­fi­cult for younger buy­ers to break into the mar­ket, so any­thing they could do as par­ents to help was cru­cial.

“I was en­cour­aged to go ahead and buy a prop­erty, which I did, and by the age of 21 I al­ready had a house rented and that en­abled me, when I did get mar­ried, to build where I am liv­ing now,” she said.

“The first prop­erty helps you buy the sec­ond prop­erty. If An­thony pays off his unit, and he’s to get mar­ried in an­other five, six, seven years or what­ever and they want to buy or build a house, he can sell his unit. If he’s made a profit on it, he can go the next step and build his dream home.”

Har­courts, Pre­ston, agent Paul Castello said the costs for young buy­ers to get into the mar­ket were of­ten pro­hib­i­tive.

“As a par­ent and as a real es­tate agent you see prices con­tinue to in­crease at a vast rate and you think to your­self how are the kids go­ing to do it and the an­swer is with help. That’s why we’re see­ing more peo­ple like An­thony,” he said.

So­cial de­mog­ra­pher Bernard Salt said the change in the num­ber of young peo­ple buy­ing prop­erty re­flected Aus­tralia’s role in the global com­mu­nity.

It em­u­lated global pref­er­ences and norms, and for many, that did not in­clude home­own­er­ship, he said.

“So that the un­usu­ally high pref­er­ence that we had for home own­er­ship has di­min­ished over time from baby boomers to Gen­er­a­tion X and now to Gen­er­a­tion Y,’’ he said.

Mr Salt said it wasn’t all about af­ford­abil­ity; much of it was about at­ti­tude.

“There are a num­ber of so­cial fac­tors that are driv­ing Gen­er­a­tion Y to live in a more fluid ar­range­ment; they travel more, they are more ed­u­cated, work­ers are far more mo­bile — if they don’t get a job in Mel­bourne then they can pop up in Syd­ney or they can pop up in Lon­don or New York or Hong Kong right through­out their 20s.”

peter.farago@news.com.au

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