Boarding a Dublin bound flight from Melbourne’s Tullamarine airport was by far the best decision I have made to date. Four months backpacking through a blissful European summer without a care in the world. That is until I boarded that flight home.
It was my first stint living out of my parents home and after four months I was right back to where I had started, only this time my bank account no longer had the finances to realistically consider a deposit on a first home.
My priorities have almost always lied in the adventures for the immediate future, not the consideration of a planned life with a house and children like my baby boomer parents sought at my age.
Now a bit older and having watched as my sister purchased a beautiful home with her husband, I wonder if I shouldn’t have been so frivolous over the years.
Have I now doomed myself? Did the dream of owing my own home get lost because I didn’t plan at a younger age? Or am I setting myself up to fail?
It could be a case for both. Research conducted for the 2014 Demographia International Housing Affordability Survey, placed Melbourne as the sixth most expensive city to purchase a home in around the globe.
Sunhood Abstraction 2, Rob Deutscher, Flickr
The survey found the average salary of Melbournians to be $75,900 per annum with the average cost of a home at $658,000. Figures rise for those accustomed to the inner city Melbourne lifestyle. Taking Williamstown as an example, a three bedroom home on average costs $975,000. At that amount I would need to save a deposit of at least $97,500 before considering it, something I can’t see realistically occurring unless I was to win Tattslotto.
The gap between housing prices and median salaries is expanding regularly and the concern it places on a younger generation looking to cash in on the Australian home owing dream is expanding with it.
Recently Co-op in partnership with BDO conducted an investigation into the saving, debt and spending habits of 18-29 year old Australians in the 2015 Future Leaders Index.
The study dubbed Gen Y ‘a generation concerned’. Our main concern was unaffordable housing at 64%. So concerned with housing prices, 9 in 10 are resigned to the fact that owing their own home will never be a reality.
Priorities the broader Gen Y population, myself included, lie in short term saving goals. 12 months to 2 years to be exact, with 8 in 10 more interested in the immediate future than any long term plans. Only 41% of the demographic are saving to buy a property and a majority saves ‘just to have money in the bank’.
It isn’t only the gap between wages and house prices that are crippling Gen Y in a bid to buy a first home. Our favourite get out of jail free card, the HECS-HELP debt is definitely making its presence felt for those earning over the 2014-15 threshold of $53,345.
Apartments Detail, Rexness, Flickr
According to the Future Leaders Index 3 in 10 young Australians have a HECS-HELP debt and 8 in 10 are concerned about the mortgage debt they may face over their lifetime. Concerns that are valid considering the majority of Gen Y are entering their adult life with some form of debt.
The reality seems to be, that as cities expand and pricing of property in inner city suburbs rise, Gen Y is less likely to be able to afford a first home in our dream location.
The money we have for deposits are better suited to a property in outer suburbs and despite the fact that we have grown accustom to the comfort of the inner city, it could provide a growing opportunity for outer suburbs to be invigorated and new life created.
For those not too sure about committing a deposit to a second best alternative, existing rental agreements could provide the best of both worlds. A home or apartment in the inner city location without the concern of a mortgage. It could be Gen Ys way of creating a new dream for living.
Words: Monica Zen