Information supplied by We Buy Houses
The Australian dream of homeownership is an assumption that has been passed down from generation to generation. Whether it was our grandparents’ dream of a suburban home on a quarter acre block with a fenced yard for the kids to play in or today’s reality, an inner city unit in a high rise apartment block - no matter the structure, homeownership is still a fundamental Aussie belief, and it is possible.
Australian property investment specialist and best selling author, Rick Otton, has been investing and teaching his innovative real estate strategies for 23 years. As the founder and Director of We Buy Houses Pty Ltd, his goal is to empower people with knowledge through his cutting edge investment strategies.
Disclaimer: while due care is taken, the viewpoints expressed by contributors and/or sponsors do not necessarily reflect the opinions of Your Investment Property.
Recently a new term has been given to those who will never be able to afford to buy their own homes. It’s called “Generation Rent” and now Australia is part of this worldwide movement.
“Generation Rent” typically describes people in their 20s and 30s, Generation X and Y, who it’s predicted may not be able to purchase a property to live in during their life time.
A recent report said about 4.5 million Australians rent, which is about twice as many as in 1981 when many baby boomers were buying their first home.
The report found that Aussies are renting for a longer period of time, of the 1.8 million households in private rental accommodation, one-third have been renting for more than 10 years.
There are many contributing factors why the dream of home ownership is slipping away. For many it’s the inability to save for a deposit in an economic climate that sees the cost of living pressures impact so much of their income. Every day people are juggling rent, transport, food, childcare and lifestyle expenses. For most there is no way that they can put anything aside such as savings for a deposit.
Another issue that stops people from home ownership is credit. Many Aussies believe that failure to pay small debts along with the credit they have with non-bank lenders will not negatively impact their ability to qualify for mortgage.
They tend to pay little attention to their mobile phone bill or gas account-especially Generation X and Y. Many fail to understand that it’s not about what the size or source of the debt is because all negative payment behaviours will be listed on a credit report. Ultimately past and present credit history will be a major factor when determining eligibility for a bank loan along with having the required deposit.
The last major stumbling block for most would be home owners is stamp duty. Whilst Stamp Duty is an important state-based tax that helps governments raise money for infrastructure and essential services, it is another cost that makes saving for a property daunting.
While some state governments occasionally offer special concessions that cut Stamp Duty in order to drum up activity in the market place, it may not be offered at the time of purchase or in the state that you prefer to reside.
There are alternative ways to buy and sell properties, including realizing the dream of home ownership, that incorporate the traditional process of buying a property and getting a loan. This system of saving for a hefty deposit and then hoping a bank will approve your loan application is not working in today’s market place as demonstrated by Generation Rent.
The awareness that there are property strategies that avoid the traditional deposit-bank-mortgage model and instead embrace the concept of ‘problem solving’ - helping people who need to sell to connect with those who want to buy.
By looking at the needs of individuals, it is possible for Generations X and Y to achieve their dream of home ownership by using non traditional solutions.
For those interested in getting out of the rental cycle and leaving Generation Rent behind click here for a free information pack.
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