Property remains key to long-term wealth creation, but with ever-increasing house prices pushing deposit goals further away, it seems all but impossible for younger generations to achieve this dream. But now more than ever is the time for young people to explore alternate ways to enter the market, rather than see it as unattainable.
Mortgage entrepreneur and founder of Wizard Home Loans and Yellow Brick Road, Mark Bouris recently expressed concern that house prices are rising faster than young people can save for deposits – and he’s not wrong.
“The speed at which you have to save money to be able to buy a property is hardly achievable, given the speed at which house prices are growing, so you’ve got to think of some other way of making money,” Mark says.
But that doesn’t mean young Australians should give up on home ownership goals. Home ownership aspirations and goals should always be part of your personal investment and wealth creation strategy, even if it remains out of reach in your 20’s or even in your 30’s.
Without the purchase of my first property in my early 20’s I know I would not have had the financial foundation that I now have – and buying that first property unlocked opportunities to accumulate equity for other investments in my early 30’s.
Even though I purchased my first property over 10 years ago, it was still extremely hard at that time. I didn’t have the full 10% deposit required, but I knew I needed to find a way into the market and buy that 3 bedroom house in Sydney.
In my case I borrowed 100% of the purchase price and was fortunate enough that I had a guarantor to secure my loan.
Although the property landscape and market are significantly different now than when I first purchased in 2012, young Australians still face the same 10% deposit hurdle that I did. But they shouldn’t give up on owning a property and should look for alternate ways to enter the market instead.
I understand where Mark Bouris is coming from given Australian house prices are rising at their fastest rate yet with a 16.1% increase in 2021, the fastest pace of annual growth since 2004, according to CoreLogic. This subsequently pushes deposits up a similar amount, adding years onto saving goals and delaying homeownership dreams once again.
For young people especially, considering alternate avenues into the property market is now key to achieving the home ownership dream. Previous generations typically lived at home whilst saving for their first home – but times have changed. And so has affordability with price growth exceeding wages growth.
Young people more often than not already have moved away from home and renting, and many would be wondering how on earth they are also supposed to save the deposit needed to buy their first property.
Our experience with Coposit shows that it presents a valid alternate pathway and the opportunity to get off the “hamster wheel” of endlessly saving for a deposit and constantly missing market cycles.
While it is difficult to rent and save at the same time, we have seen that Coposit can drastically help first home buyers manage cashflow and spend money more efficiently. The long-term gain of owning property is far greater than the short-term pain of tightening your belt to save and thanks to Coposit, the days of needing to save a 10% deposit upfront are soon to expire.
Property acquisition needs to be carefully considered and planned as a strategic long-term investment.
While property prices and saving huge deposits needed can be discouraging, instead of simply writing off home ownership young people should consider their long-term objectives and explore alternate, non-traditional ways to enter the market.
The main hurdle facing prospective homeowners is the timeframe and speed at which it takes to save for a deposit. Most people can afford mortgage repayments when rent is removed from the equation, but simply cannot save a deposit fast enough to beat rising market prices.
Coposit provides a new pathway to enter the property market and helps to speed up this process with just $10k in savings, fast tracking your property purchase and giving young property buyers the chance to get a foot in the property market, locking in today’s prices at tomorrow’s value.
I wonder what advice Mark Bouris has for young Australians desperate to get into the market now that Coposit has removed the deposit barrier?