By Lindsay David, Australia, author of Print: The Central Bankers Bubble, founder of LF Economics:
Gen Y wannabe property buyers need to stop complaining about being priced out of buying a home.
As good as a Greek getaway would be during their summer, Europe’s not going anywhere anytime soon so you don’t have to blow cash that could go towards a property.
Who wants to have fun in Mykonos when they have grey hair and three kids?
Lets be a little realistic. Hardly any first-time homebuyers today are getting into the property game without their parents blowing a huge chunk of their life savings in order to help their kids come up with a measly down payment for a house.
I’m very sorry Ayda, but if you are a managing director of a property consulting and finance firm (helping Australian’s load up on debt) and are advising young Australians to give up their youth and sunny holidays in order to get into the real estate market at these prices, I sure as heck hope you are also advising clients of the potential risks involved in buying real estate and the financial risks to young homebuyers if they cannot repay their mortgage…. And how life sucks when you are in your early 20’s, stuck at home having dinner with your parents on a Saturday night whilst all of your friends are out making the most of their youth.
I know the previous generation of Australian’s were not stuck at home watching “Hey Hey is Saturday” with their folks whilst buying property at a younger age.
And I’m sure that across the nation that the overwhelming majority of property advisors and financial brokers have absolutely no clue how to assess the macroeconomic headwinds that are arriving at Australia’s doorstep.
There is a reason the younger generation of Australians are not buying property. It’s too expensive, their wages aren’t growing, and it makes no sense to mortgage their life away when they could have a better quality of life by not buying property in this current market. The ability of a first-time buyer to buy a house today has very little to do with their own ability to save. Either their parents pony up the cash or they rent.
And as for the holidaying in Mykonos, it’s a whole lot more fun to be there over the European summer months than it is being stuck paying a hefty mortgage for an unaffordable run-down suburban dump miles away from the central business district in a host of property markets that have now flatlined. Including Ayda’s hometown of Brisbane where there is a good chance that the cost of maintaining a highly leveraged property outpaces by a significant margin the actual appreciation of the price of the property.
Or lets look at another Queensland town…. Emerald, where the bubble has already burst and house prices have fallen by roughly $200,000 (40%) over the last three years. Now there is probably some young Emerald resident who listened to one of Ayda’s industry counterparts and is now stuck paying down a mortgage that is significantly higher than the current price of the property itself (mortgage under water).
And the friends of that young Emerald resident, who are not stuck with a mortgage, have actually profited from not buying property and going instead to Mykonos and partying their brains out. They’ll come back to Emerald with a hangover and the chance of later buying their mate’s underwater house at a 50% discount whilst telling him about the great time they’d had in Greece.
I believe it is imperative that the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) change the rules to limit the ability of a financial or property advisors in Australia to also be a financial broker of home loans. There is simply too much commission flying around for property advisors to give proper advice. By Lindsay David, Australia Boom to Bust Blog, author of Print: The Central Bankers Bubble
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