Gen Y changes mindset
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.”