The average age of first homebuyers in Australia has risen to 31 years, up from 25 years in the 1970s, according to a recent survey conducted by mortgage insurance provider Genworth.
BY VANESSA DE GROOT
News reports largely attributed the fact that homebuyers are now six years older when they buy their first home than four decades ago to the age old issue of affordability.
But I’m not convinced that affordability – or the unaffordability of homes –is really the issue.
Back in the 1970s life was very different. Now, many people complete year 12 and then go to university, where they might spend three years or more studying. They might also spend some time travelling overseas, and once all this is done, they enter the working world.
In the 1970s, however, it was a very different scenario – people often went straight into jobs from school (perhaps even after completing year 10) and they were earning a full time wage from a much younger age, so they were able to buy a property younger.
The time now spent going to university and travelling overseas has basically pushed back the age that we enter the workforce and are therefore able to buy a property.
Nowadays we have much less sense of responsibility when we’re young – the focus is on getting an education and experiencing life. Many of us are welcome to stay at home with our parents for longer while we do that; we don’t have to be financially independent because we’re being taken care of for longer.
We’re also not starting our ‘proper’ adult lives until later – people are getting married at a later age and starting families when they’re older and buying a home goes hand-in-hand with these types of commitments. So that’s another reason why people are becoming first homebuyers at a later age.
So really, the ‘affordability of housing’ issue can hardly be blamed for people buying their first property at an older age.
I must point out though that I’m concerned that people are waiting so long to buy their first property. While I believe it’s important to have those years studying and having fun, I also think it’s the responsibility of parents now to be instilling into their children the importance of being financially secure and part of that is learning to be financially independent from a young age.
The earlier we get into the property market the earlier we’re able to use the equity we’ve built up to invest and secure our future financially. I don’t think people really get just how important this is.
Even if kids stay at home for longer, parents should be drilling into them that they should be saving and as soon as they can they should buy a property – all they need is a deposit to get started; they can rent the property out and continue to live at home and they’ll be building equity and when they’re ready to enter the world, they can then buy their own home.
And saving is an important discipline – it’s something people should be learning from a young age and I don’t believe they really are. It’s definitely hard to save when you’re a student with a part-time job, but putting any money away at all will help.
The bottom line is that the problem isn’t affordability of housing – as in, it’s not the fact that house prices have climbed so much that people can’t afford to buy them. The problem is that people can’t afford to buy until they’re older because their full-time working lives are starting so late and they haven’t accumulated savings in the lead up to that, or thought about their financial future.
Tell us your thoughts. Do you think it takes longer for people to buy a home because prices are too high, or is it due to their lives going down a different road in the 21st century?
Vanessa De Groot is the deputy editor of Australian Property Investor magazine, www.apimagazine.com.au