Yahoo Finance 'Delusional' trend stopping young Aussies buying their first home: 'Nobody is willing to sacrifice'
First-home buyers have been urged to set realistic expectations as they enter the property market.
Young Aussies have been warned to set a realistic outlook about buying their first home. While the dream of homeownership might seem like a distant or even impossible reality for many, property experts believe more people could get into the market if they stopped trying to buy the perfect home.
Mortgage broker Jess Phillips said she has seen far too many young wannabe buyers coming in with wild expectations about what they can afford. Whether it's price range, suburb, or property size, she told Yahoo Finance that many just want everything now.
"This is your first step into the property market and then you leverage this later," she said. "It doesn't have to be the biggest and the best and most of the time."
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You don't have to have the best at the start
Phillips believes social media has played a part in creating an unhealthy standard for what Aussies think they should have by a certain age.
"People only ever show the highlights of their day, and it might be 30 seconds and then they just think that they have to keep up with that, and especially in Sydney... it's crazy what people in Sydney think they have to keep up with," she said.
"It's just not necessary."
Phillips reckons young homebuyers need to reset their ideas on what is affordable.
"You don’t need to be buying the best and biggest house you can possibly buy with your borrowing capacity as a first step into the housing market as your first home," she said.
Stop being 'delulu' about what you can afford
Emily Wallace from Wallace Advocates has urged Aussies to do their homework if they think they're ready to buy a home.
She said some buyers are being "delusional" (or "delulu" as Gen Z would say) because they constantly expect properties to sell within their price range.
"People are gobsmacked that they missed out on a property that they only had a budget in the range of like $600,000 to $650,000 and they've only got a $620,000 budget," she explained to Yahoo Finance.
"Spend time doing research, like go out of the market, track what things sell for versus what they were priced at, and just do some market analysis of what is actually attainable for you before you're even ready to buy because it'll save you a lot of grief."
Wallace also said you shouldn't try to buy a home based on tiny considerations, even if they might be important to you.
"People focus on buying for someone else... guests who stay 10 days a year, or a second toilet for guests that come for a dinner party... over the practicality and getting into what was in your budget in an area," she said.
Aussies called on to stop being 'entitled' about property
Fellow buyer's agent Madeline Roberts was shocked when she posted on social media about a $450,000 home 30 kilometres from Melbourne's CBD that could be a great first step into the market.
The post was met with plenty of comments from people who said it was awful and so far away from all the action.
"It is wild the level of entitlement that so many people have," she said in a follow-up video.
"Everybody these days wants to have their cake and eat it too, and nobody is willing to sacrifice. I just turned 30 this year and I own a property in a pretty premium location and I'll tell you what, the amount of properties I've owned and had to live in in order to get here... it was honestly back-breaking."
She revealed she bought her first home when she was just 18 and her second a year later.
Roberts explained that unless you're getting a huge cash injection from your parents, an inheritance, a side hustle, or wherever, then you have to be prepared to do the "ground-work".
There's no 'magic trick' to getting a great first home
Entrepreneur Mark Bouris similarly called on young Aussies to do what generations have done before them and work their way up to their dream property.
“[Younger Australians] in particular, think there is a magic trick. There’s no secret,” Bouris told news.com.au.
“It’s pretty simple, increase the top line – the revenue – and reduce the bottom line – the cost. That’s the only thing you can do. There is no magic trick. And maybe one thing you could do is change your expectations.”
He said first-home buyers would have fewer disappointments if they cast their net a little wider than just where they grew up in.
Whether that's a different area in the city or even somewhere regional or rural, it could help you get into a tight and ever-changing market.
Worst period 'on record'
It's worth pointing out that young people are also facing a period that is undeniably dire, even if they do go far and wide and have moderate expectations.
PropTrack's recent Housing Affordability Report found that a typical median-income household (which is roughly around $112,000) can only afford just 14 per cent of homes sold across the country.
That figure marks the smallest share of homes since records began in 1995, with the share declining from 43 per cent in just three years.
NSW, Tasmania and Victoria were named the states with the worst housing affordability rate.
The report found a median-income household could afford just 10 per cent of homes sold in NSW, which also had mortgage costs higher than anywhere else in Australia.
PropTrack’s report also found mortgage costs are as high as 2008 levels and only just below historical peaks reached over 1989-90.
“An average-income household would need to spend a third of their income on mortgage repayments to buy a median-priced home,” PropTrack senior economist Paul Ryan said.
“Households across the income distribution could afford the smallest share of homes on record over the past year, with a noticeable decline from just a year ago.
“In this time, income growth has been insufficient to offset rapidly rising home prices and mortgage rates, meaning the typical Australian household can now afford only 14 per cent of all homes sold across the country.”
- with NCA Newswire
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