New world for Gen Y buy­ers

The Weekend Post - Real Estate - - Front Page -

are no doubt fully aware that I do not fall into the Gen Y age de­mo­graphic and I ac­knowl­edge that the mar­ket, leg­is­la­tion and house buy­ing process was a very dif­fer­ent beast in the pre-mil­len­nium decades.

Those un­der 35 are fac­ing a very dif­fer­ent and chal­leng­ing prop­erty pur­chas­ing era than I did and my par­ents be­fore. I was about to in­clude grand­par­ents in that list but, in re­al­ity, home buy­ing and sell­ing for that gen­er­a­tion would be un­recog­nis­able when com­pared to the mod­ern hous­ing mar­ket.

The strug­gle to find a per­ma­nent home for the younger gen­er­a­tion has been an up­hill bat­tle in pre­vi­ous gen­er­a­tions too, so it is noth­ing new. The dif­fi­culty for gen Y right now is you are com­par­ing your ex­pe­ri­ences to those of buy­ers and sellers in the last three to four decades, around and be­fore the mil­len­nium.

I can un­der­stand the frus­tra­tion felt by so many now, watch­ing true af­ford­abil­ity dis­ap­pear in the wind. Com­pe­ti­tion to buy homes in key ar­eas has in­creased as over­seas pur­chasers dip their wealthy toes in our pond, while the mas­sive in­crease in home­grown in­vestor ac­tiv­ity gnaws away at our hous­ing stock. Add in our ma­jor cities see­ing dou­ble digit cap­i­tal growth in re­cent years and that stamp duty cost, which can hit you hard when there are no in­cen­tives avail­able.

I bought my first house at 18, ad­mit­tedly with a lit­tle wind­fall from my grand­mother, which was enough for a 5 per cent de­posit. I would like to men­tion the house was filthy and in a state of dis­re­pair. It pushed me so much fi­nan­cially that I was the 18-year-old that could never af­ford the sec­ond beer; the guy com­pil­ing my own mu­sic on a su­per­mar­ket brand of C90 cas­settes; and for whom “club­bing” was limited to free en­try venues, mid­week.

So what lies ahead for the next decade or two?

Well, I do not be­lieve the cap­i­tal growth per­cent­age will give home­own­ers and in­vestors the re­turns we have wit­nessed pre­vi­ously; buy­ing a home is cer­tainly for the more ma­ture now. If you are a twenty- or thirty-some­thing want­ing to buy, or even a par­ent will­ing to share some of your equity to get your kids started, con­sider the fol­low­ing:

Af­ford­abil­ity is pos­si­ble for many, the com­pro­mise might just be the size, type, or con­di­tion of the prop­erty.

Don’t ex­pect quick prof­its. If you are able to buy where you want to live, se­cur­ing a prop­erty there could just be the start. You can ex­tend or ren­o­vate in years to come; it does not have to be com­pleted im­me­di­ately.

Ac­knowl­edge home own­er­ship is not for ev­ery­one. The chal­leng­ing years ahead may mean you make a con­scious de­ci­sion to de­lay the process un­til later. This may not be as dis­as­trous as you think. For many wealthy types, the ac­cu­mu­la­tion of prop­erty equity oc­curred nearly by chance; tim­ing and pa­tience paid off.

So, should you be more re­al­is­tic with not only your prop­erty ex­pec­ta­tions but the fi­nan­cial gain it may or not make?

I would say a re­sound­ing yes. But please don’t panic as you should en­joy the process.

THE BIG IN­VEST­MENT: Af­ford­abil­ity for your first home is pos­si­ble for many, but the com­pro­mise might be the size, type, or con­di­tion of the prop­erty.

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