All I hear about lately, is how the first home buyers in Australia cannot afford to buy their first home due to house prices being unaffordable.
I have to say, I am sick of all the whining. This sense of self-entitlement is simply sickening. Apparently, things are so much tougher than they were ten, twenty and thirty years ago.
But were they?
When I first purchased my home I was 19 – so that makes me a Gen X. Yes, I was 19 and yes, during high school I only earnt $25 per week in a part time job. When I left school, I was working 6 days a week, taking home $375 per week. That’s an income of $18,000 per annum.
But, I managed to save 20% of the purchase price of my home, plus stamp duty. I purchased it for $112,000, meaning I needed a $30k deposit. We didn’t have first home owners grants back then so we had to pay the full stamp duty. Earning $375 per week made this difficult, so to help myself get there, I bought and sold many second hand cars and made a few hundred dollars from each sale. It was essentially a second job.
There weren’t the loan products available like there are today, where you can have just a 5% deposit. Mum and Dad couldn’t borrow against the equity in their home to give me a deposit either. We had to save. Yes, it’s a nasty word.
Now when you look at the figures, $30k was what I needed. Today, a first home buyer who wants to buy a brand new, 2 bedroom unit now for $500k only needs a 5% deposit and no stamp duty, therefore only needs around $27k and I bet your income is at least three times what I was earning. But I feel your pain, it must be difficult.
I only lived in that first property for around 6 months then I rented it out. And I didn’t own another home again until I was 34. I chose to invest in property first to make money, so that I could afford to buy a home.
I drove a 1970 Toyota Corolla, which I bought for $900. You didn’t see me driving around in a fancy new car.
Now, when I purchased my first property, I bought what I could afford. I know that this will be hard for the Millennials to understand, but we all can’t always have what we want.
So, I purchased a tiny 1 bedroom unit with a car space. Sure I wanted a three bedroom house, but my budget couldn’t stretch that far. Now those same 1 bedroom units in Cronulla and Caringbah are still affordable at under $400k. But no, you couldn’t settle for that. What would our friends think about us if we lived “there”?
When I talk to my parents about their first home, they tell me how they used milk crates with a cushion as a lounge for 4 years before they could afford a proper lounge. And Dad worked two jobs to make that happen.
Yes, two jobs. On no, we can’t work two jobs, we would be tired.
We didn’t drink $4 coffees everyday, we didn’t have Foxtel, Netflix, Spotify. Our mobile phones lasted for many years. We had one TV in our house, not 4. We didn’t have lavish weddings for $60k, nor travel overseas for 12 months on a Gap Year, partying 24/7 whilst deciding what we wanted to do in life.
We didn’t get our cars washed for us nor get our shirts pressed. I didn’t have a credit card until I was 25 and even then the limit was $500.
Why do you need mobile phone plans with unlimited phone calls and massive data allowances, when you can log onto free Wifi almost everywhere? Like numerous other countries do?
And we certainly didn’t have children if we couldn’t afford to do so…
I hate to think what the next generation will be like if they are being brought up in this environment already.
So the latest political bashing has been on negative gearing. And how it only benefits the rich, and is the reason First home buyers have been priced out the market.. Well, it’s not benefiting the rich (or should I say the average income earner) very much. The latest ATO stats, that are two years old now, state that the negative gearing costs to the budget dropped by over 50% since the previous year. So what is all the fuss about?
That argument would have been relevant when interest rates were at 8%+. However, I see it as political grandstanding. I can tell you that if they drop negative gearing, then be prepared for rents to increase. Which is exactly what happened when they did this in the 90’s.
Now, I have barked enough, so what’s the solution?
I honestly believe Millennials need to go without a few things. Get back to basics, learn to budget, learn to save and know that you can’t always have the property you want right now..
If you can’t afford it, then buy what and where you can afford. Even if that means you need to own an investment property or two first, then use that as a stepping stone into your first home.
Millennials, this is life – where you don’t get a participation trophy.