Property market set for generational shift as young people reassess options

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Australia’s property market may very well be undergoing a generational shift, with figures seemingly revealing the ranks of investors in the country are increasingly being made up of younger people.

Figures from Mortgage Choice’s latest Investor Survey show that in 2016, 50.8% of investors were 34 years of age or younger when they purchased their first investment property.

In comparison, the survey revealed that in 2013 just 33.8% of investors were aged 34 or younger when they first purchased an investment property.

John Flavell, Mortgage Choice chief executive officer, said the survey’s findings were surprising given current market conditions.

“With property price growth outpacing wage growth over the last few years, saving a deposit and buying property has become very difficult for a lot of younger Australians,” Flavell said.
“Furthermore, the recent spate of investment lending changes has made it tougher – in some instances – for younger Australians to obtain finance to buy property,” he said.

But while Flavell said he thought roadblocks may have been working against young people trying to break into the market, Helen Collier-Kogtevs, managing director of investment advice firm Real Wealth Australia, said recent years have seen more and more young people look to build wealth through property.

“I have certainly noticed that more and more young people seem to be interested in property investment. For me, it is great to see people planning forward and looking towards their retirement earlier,” Collier-Kogtevs told Your Investment Property.

“It may not be sexy to be thinking about retirement when you’re in your 20s and 30s, but it is so important to consider your financial future when you’re younger,” she said.

In terms of price growth, Collier-Kogtevs said there is no doubt some areas of Australia’s property market are now out of reach for young people, but she also said that may have led to many young people to reassess their opinion of the property market.

“The cost of housing has certainly increased in the last five years, particularly in places labelled ‘hotspots’ and inner-city dwellings,” she told Your Investment Property.

“If the generational change hasn’t happened yet, I think it will. I believe that this generation like to live closer to the city or places where there is a lot of infrastructure, opportunity and cultural and social things ‘happening’.

“Because of this, they may choose to purchase an investment property, where they can afford – in the suburbs or even regionally – in the hope that it generates enough income to assist them in purchasing a place where they want to live in future – say the inner-city.”

For those who disagree with her, Collier-Kogtevs said it’s likely that people, no matter their age, would find the property market much more accessible with some small behavioural changes.

“I believe that if most people actually did a budget and lived within their means – as opposed to thinking that they do and continually overspending ­– then they could afford to purchase a house.

“It might not be their dream house, but it could be a growth asset nonetheless that will bring them closer to their long-term financial goals.”

Similarly, Collier-Kogtevs said the issue of affordability is also likely used as a get out card by those who aren’t willing to tone down their expectations.

“There are many people who are wanting to buy property and complain that they can’t get what they want, because it’s unaffordable – and these are the people who perhaps need to lower their expectations.

“I don’t think this is necessarily limited to younger people, either. Investing in property is about being realistic.”

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