The Australian dream is fine for those who can afford it
To own your own home is the dream of many. I never noticed it as much until I arrived to Australia almost 7 years ago.
People younger than myself had already purchased their first homes; some even had additional investment properties. I was shocked; I couldn’t understand how they managed to achieve it.
In Ireland then, no one I knew in my age bracket owned their own home, instead we all rented and spent most of our disposable income on entertaining and holidays in Europe.
It was a lot of fun and despite the fact that when my wife and I packed up to relocate to Australia we realised that we could condense our entire life into two small cardboard boxes - I still wouldn’t change a thing.
We had photos, little gems of memorabilia, vital keepsakes and a fabulous vault of youthful memories. We were young and carefree and that’s all that mattered.
Over here the culture was different, many of the people I talked to rejected the idea of renting, brushing it off as wasted money. The focus was on living at home for longer, working hard and saving, only moving out when you were ready to pay a huge lump sum off your first mortgage.
It was all quite new to me. Until then, buying a house was the furthest thing from my mind and I have to admit, I wasn’t easily convinced. I even resisted the pressure in the years that followed; convinced that buying a house would only stifle my living, spontaneity and enjoyment of life.
Eventually though, the time was right, the kids soon arrived, along with one or two grey hairs and I too was ready to chase the home owners dream.
Buying a home is not only a place to call your own or having walls that you can hammer nails into confidently without a landlord beating down your neck; it’s a solid investment and for many, an indirect way to save money.
Nothing’s ever certain, but quite often, house prices increase greater than inflation and all going well and the market being right, when you do eventually decide to sell, there’s a chance you might make a few bob in the process.
I can fully appreciate this now and if I’m being honest, there are those rare occasions when I kick myself as I think back to when I was younger and the savings that I didn’t accumulate. Buying a home is a good thing, a great thing - but certainly not an easy thing!
Recently, low interest rates, the generous first homeowners grant and the commonwealth boost scheme attracted buyers into the market. As a result, the country enjoyed an increase in spending but at the same time, most cities witnessed a hike in real estate prices due to high demand.
Following on from this, the Reserve Bank, responding to the favourable financial expenditure, began increasing interest rates to compensate. Now we’re in 2010, the boost scheme has been phased out, interest rates are still on the rise and latest figures show that housing shortages in Australia will quadruple by 2020 - where does that leave new buyers who are trying to purchase their first home?
In an odd sort of way, it makes me think of a blackjack table. On the first occasion that I played, I found I had to learn quickly from the “pros” playing alongside me, that in order to increase everyone’s else’s odds, quite often you had to take one for the team - i.e. Place your bet and then take an extra card even though you know there is a high probability you will lose.
In the end, the rest of the players might benefit from your fall.
Australia has some of the most expensive real estate in the world, mortgages eat into considerable amounts of the average monthly wage and while the demand for houses remains high, the prices we’re paying in order to secure the housing dream is excessive. In the end, not everyone will benefit, especially new homebuyers.
We’re entitled to chase the house of our dream at whatever cost we’re willing to pay, we don’t have to weigh up the effect one purchase will have on the grand scheme - we simply have to live our own lives.
One thing is for certain though - if the current tide continues, we’re going to see further drops in new and younger home-buyers and if that is the case, all I can say to them is to enjoy your youth, go on that Contiki tour, have some fun and don’t worry, there’s still plenty of time to be tied down to a mortgage!’
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