Does the dream still exist?

dream Does the exist?still

Which country’s inhabitants most aspire to home ownership?

A Google search brought up a 2019 list of countries by home ownership rate, the ratio of owner-occupied units to total residential units in a specified area, which was not exactly the question asked.

The first ten on the list were Romania, Hungary, Slovakia, Singapore, Cuba, Lithuania, Croatia, China, North Macedonia, Nepal. At 41, Australia was sandwiched between Canada and the United States. New Zealand was 46th.

Great Australian Dream

‘The dream’ stems from a belief that home ownership can lead to a better life and is an expression of success and security. Once upon a time it was only about home ownership, but our goals kept expanding. A home. A family. Steady employment, and a comfortable retirement.

According to a finder.com.au survey, many of us think we’ve made it financially if we have paid off our house, have a healthy stash of super and take an overseas holiday every year (it obviously wasn’t a 2020 survey!).

THE NEW ENTRY IN THE INVESTOR DEMOGRAPHIC

‘livevestor’

Buyers who use government stimulus to secure their first home based on its long-term investment potential rather than being seen as their long-term home.

In New Zealand, it’s the Great Kiwi Dream: the bach, the boat and the BMW, with the ‘three Bs’ an accepted stereotypical view particularly of why Kiwis go into business and what they expect to get out of it

Are those dreams fading?

In November last year, ME Bank released new research looking at the pandemic’s economic impact on the younger generation. Almost seven in 10 young Australians believed that owning a home is increasingly impossible to achieve and that owning a dream home, finding a dream job, and retiring at or before the age of 65 is harder to achieve for their generation.

Prior to last year, there had been a slow but discernible shift happening in Australia. We were doing more travel overseas and the most travelled were aged 30 to 34. In fact, 25 to 34-year-olds took almost the same number of overseas trips in 2019 as all Australians took in 1990.

The great Australian dream for many millennials had become, through both desire and necessity, the ability to travel widely and live and work anywhere rather than a big house and backyard. Then along came COVID and stymied that dream.

Could rentvesting be the new dream?

Has the new dream for today’s generation become more practical, aligned with a stable income, good health and paying bills on time?

Buying your first house and not actually living in it is emerging as an effective way for young Australians to get a foothold on the property ladder. Rentvesting is about buying where you can afford and renting where you choose to live. If you live in your own home, your loan repayments go towards paying down your debt.

There is no assistance in the form of tax benefits, depreciation, or rental income that helps pay down that mortgage quicker. Sure, as a rentvester, you have to rent somewhere other than your place, but, along with the tax benefits, the property can be bought without any emotional attachment to living there, which tends to lead the rentvester to more affordable buys.

With interest rates at record lows, there is potential for even first-time buyers to secure cash-flow positive properties. The key is in finding where land values are likely to appreciate. Look at employment rates, where the government is putting in infrastructure, check schools and transport, all of which point to a good investment opportunity and are appealing to renters.

So, ‘the dream’ may no longer relate to owning one property and living in it for the rest of your life. It appears that rentvesting is allowing young people to live the lifestyle they want while building financial security through property investment.

When the going gets tough, the tough get going

Young Australians are looking beyond the doom and gloom, are setting their sights high and looking for ways to improve their financial futures. Incentives and subsidies have been introduced for first home buyers to assist them to enter the property market.

While travelling overseas may still be on hold, there is no reason to put saving for a house deposit on the backburner. Rather than lose hope in home ownership, it is time to reassess goals, upskill the management of personal finances and seek support when you need it through the myriad of resources available to you, including real estate and financial professionals.

Don’t slot yourself in the pessimistic percentage that thinks owning property is unlikely.

CONSIDER THIS…

The Great Australian Dream

The roots of the original Australian Dream go back to the early colonial Australian settlers. It evolved after WWII but was popularised in the 1950’s and 60’s when Australia enjoyed a baby boom, low unemployment and general prosperity.

The Original Dream

The central part of the Australian dream revolves around home ownership. The keys to your own home were a sign of success – and security.

The New Australian Dream

The Australian Dream is alive and well, but it has had to evolve. The new generations of buyers are changing what they are looking for. A house with a large backyard and pool may no longer be achievable so they are shopping smarter, with more refined expectations.

Smaller properties, townhouses, apartments, shared outside space, communal pools, shared houses and buying ‘further out’ are all on the table. How homes interact with the environment is important, with energy efficiency, recycling and environmentally friendly materials highly rated.