The RBA has found that new property owners are more financially secure than renters.
And they recently released a 44-page report confirming this.
Now I guess they haven't been reading blog Property Update blog – I could have saved them a lot of time and trouble doing this research!
However, they have concluded that young Australians who bit the bullet and bought their first homes since the financial crisis – in the face of galloping prices – are more financially secure than previous generations and show fewer signs of being vulnerable to a downturn.
The report found that the first homebuyers who knuckled down and bought a property post-2007 had the discipline to do so, which meant they were naturally less risky financially.
What I mean is that, even though property prices were rising, the buyers who saved diligently for a deposit for their first property had the financial discipline that is associated with fewer subsequent difficulties.
In fact, the report said that:
"While the first step on the property ladder is more of a stretch than before the crisis, those who do make the step are, on average, better placed to pay off their loans than prior to the crisis."
There are likely myriad reasons for this including the fact that interest rates have been historically lower since the GFC which means they have a better chance of getting ahead on their repayments than buyers pre-2007.
Fewer first homebuyers generally over recent decades is also addressed in the report which says that high property prices aren't the only reason.
People are getting married much later – if at all – and they're also opting to rent in desirable locations longer, too.
However, the study found that saving a deposit was an issue for about one third of potential first homebuyers.
On the other hand, servicing a mortgage was only a concern for a mere five per cent of renter households who desired to become property owners.
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Australian property prices have increased dramatically since the mid 1990s and one of the reasons for this is that there were suddenly two incomes to pay a mortgage.
It's hard to believe today that it wasn't that long ago that it was common for the man to work and the woman to stay home to look after the children.
Society has changed drastically in just a few decades – and for the better if you ask me.
And even though the numbers of first homebuyers has reduced, the research showed it was also because people were taking longer to become one-half of a couple, which drastically increased their buying and borrowing power.
Also, life-cycle plays a big part in when someone decides to buy a home, according to the report.
The older you are – whether single or in a couple – the more likely you are to enter the property market.
In fact, the findings suggest people do not decide to become first homebuyers because they get a promotion, but because they get older and enter into married and de facto relationships
Financial security is something that I write about constantly and this report proves that property ownership is one of the keys to attaining it.
The research found that the share of first homebuyers that reported being either moderately or totally satisfied with their financial situation in the 2008 to 14 period increased by nine percentage points from 57 to 66 per cent – higher than other owner-occupiers and renters.
They were also much less likely to have ever been late on their mortgage repayments or to ask for financial help.
Those first homebuyers who decided to take action when everyone else was on the sidelines have clearly made the right decision.
And it's a decision that sets them on a path to wealth creation if they continue to be brave when others are fearful.