A new study has revealed that members of the millennial generation are Australia's best savers, making them an ideal market for investment properties.
Australians aged 18 to 34 save 32% of their monthly income, significantly more than the national average of 23%, according to the Suncorp Best Saver Report.
"Many in this age group are likely to be enjoying an increase in their income as they finish university or build their career, while still having the flexibility of fewer big financial commitments — a strength which generally stops as you get older," said Chris Fleming, Suncorp executive general manager for consumer banking.
The study said millennials are motivated by tangible goals, such as buying their first home or getting an investment property.
"This goes against the common assumption that this generation has given up on the great Australian dream of homeownership," Fleming said.
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A separate study by CoreLogic said the substantial price gains during the boom a few years ago priced many millennials out of the market.
"Ninety percent of millennials think buying their first house is going to be something that's going to be very difficult to achieve and think they're going to have some real problems getting in at all," said Tim Lawless, CoreLogic head of research.
Millennials aspiring to buy a home often have to deal with three challenges, said CoreLogic International CEO Lisa Claes.
"First, they must raise a deposit. Then, gain approval for a loan. That's become tougher in the wake of the financial services royal commission. Then they must pay stamp duty, on average 3% of the purchase price," she said.
Given that saving is one of the challenges homebuyers nowadays face, the Suncorp study raised a potential solution: saving money based on a percentage rather than the dollar value.
"People view their budgets in dollars and cents, and generally as we get older even though the dollar value saved may get larger, as the research showed us the percentage of our income saved gets smaller," said Suncorp behavioural economist Phil Slade.
