Home Ownership for Young Australians
It is the dream of many Australians to own their own home, but when is the best time to buy? Some are choosing to buy a new house after establishing strong careers or to accommodate growing families, while others are opting to invest in property in their early 20’s. There is a great deal of diversity in the Australian housing market, so just what does the average Aussie first home buyer in 2020 look like?
Interestingly, there is a growing trend for younger people, particularly solo buyers, to invest in property, especially during their 20s. But is it a good idea to make such a large financial investment at this age? The truth is that there’s really no ‘right’ or ‘wrong’ time to buy a new house. It’s different for everyone. But there are a number of benefits that can be experienced by choosing to buy your own home before you turn 30.
1. Moving may be easier in your 20s
According to the Holmes-Rahe Stress Scale, a change in residence is one of the most stressful life events that anyone can experience. Yet moving into a new house is arguably easier to navigate during your 20s, especially in terms of possessions. For those previously living with parents especially, from a possession perspective moves can be remarkably simple. A study by Reuters Health found that excess possessions were more likely in the 50-79 demographic. 62% of 70-79-year olds say they have more than they need. And even if you do have a tendency to hoard, mobile storage units are affordable and can be used to safely store items that perhaps don’t fit into the new home. But the truth is that people in their 20s may not have as many things to take into account when buying a new home, such as children, school districts, or pets, which can make finding the perfect property a lot less stressful, resulting in an enjoyable move.
2. You could be mortgage-free in your 50s
House prices in Australia vary considerably, and if you’re looking for a new house in Adelaide you could be looking at a reasonably affordable $438,000, while a Sydney equivalent could set you back $840,000. Sydney’s high cost of living brings the average loan size for first home buyers across the country to $336,500. In purchasing a property in your 20s, you could have a standard 25-year mortgage repaid by the time you reach 55, offering you greater financial freedom as you edge closer towards retirement.
According to a report by National Seniors Australia, 62% of older people cite retirement savings as their primary concern. When asked if they worry about outliving their savings, more than half of those questioned answered ‘yes’. Money concerns in older age are common. By buying a home in your 20s and spending your working years paying off your mortgage, you could be left with more to enjoy retirement.
3. You can save money on rentals
A $300,000 loan, for 25 years, at a standard variable interest rate of 4.42% would result in a monthly repayment of just over $1,100 per month. While this is certainly a significant amount more than the average house rental cost, it’s also an investment. Each monthly payment is going directly towards achieving the dream of homeownership and is money in your pocket. Rentals are more budget-friendly, but the rental fees contribute to your landlord’s growing property portfolio, rather than to your funds. And your home could even make you money. Reports show that more Australians are moving overseas than ever before, particularly those in their 20s and 30s who have perhaps not yet started families. Popular destinations they’re heading for are New Zealand, Hong Kong, and Singapore. A new house is an investment, and renting it out while you travel could help fund your trips to explore the world.
To Buy Real Estate or Not to Buy?
There really is no right or wrong answer. However, as we can see, there are certainly many advantages to buying a new house in your 20s. Ultimately, it’s important to do what’s best for you and your future. What will real estate in 2020 look like? No one can say for sure, but what we do know is that with multiple first home buyer options, including the First Home Owner Grant and stamp duty exemption, along with the First Home Super Saver Scheme which Australians become eligible for at 18, we can reasonably expect it to become easier for people in their 20s to get a foot on the property ladder.
Renee Wainwright is the Gobox Mobile Storage Manager whose years of experience in the industry allow her to provide customised and tailored mobile storage solutions to suit residential, business and corporate customer’s storage and moving needs.