Young people are feeling more disheartened than ever about their prospects of owning a home.
This is despite falling property prices, according to new research by Finder.
In fact, the survey found more than a third (37%) of non-homeowners say they don’t think they will ever be able to afford a home, a substantial increase from 23% in 2021.
Based on the research among gen Z non-homeowners, the percentage who feel they will never be able to afford property has increased from 6% in 2021 to 15% this year, while for millennials it has grown from 21% to 34%.
Recently the media has been full of stories predicting house prices will fall over the next year.
Richard Whitten, a home loans expert at Finder, said it was sad but understandable that many young people were worried about the prospect of owning a home.
"House prices have skyrocketed over the past few years, and have become downright ridiculous in some areas.
But with economists predicting a recession and interest rates finally rising from their rock-bottom lows, it’s likely we’ll see house prices fall in the second half of 2022, especially in Sydney where prices can be more volatile.”
The research also shows more than 1 in 4 (26%) Australians believe property prices in their area will decrease over the next 12 months, compared to just 7% last year.
Mr Whitten said given the strong price growth of recent years, a small decline in prices doesn't help housing affordability all that much.
He further explained:
“That said, the situation should improve as interest rates continue to climb, and prices fall further.
This is a good opportunity for aspiring homeowners to get in while prices are lower, and balance out the extra costs that will come with rising mortgage rates.”
On the other hand, only 27% of Australians believed it was a good time to buy property in March, a record low and down from a peak of 67% in December 2021.
The figure has since increased slightly to 33% in July, indicating that some may be starting to see the potential in a declining housing market.
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Mr Whitten said not everyone can afford property, and some don’t even want to.
"Australians are obsessed with property, but there are other ways to build your wealth.
Start with keeping your cash in a high-interest savings account. Savings rates are becoming much more competitive, and as they increase all that interest you earn will compound.
Share trading is also a way to build wealth, and you can get started with as little as a dollar with some platforms, or even investing your spare change through micro-investing apps."
The team at Finder have come up with the following suggestions:-
- Work towards a goal
Savings goals are easier to achieve if they're specific, so work out a figure and write it somewhere you'll see often to keep you on track.
Try to aim for at least 3 months' worth of living expenses saved.
2. Track your expenses
Take a look at your transactions for the last few months and what you're spending on living expenses versus everything else.
Money management apps can help you see your income and expenses all in a single place.
From here, you should be able to find opportunities to cut back on your spending and work out how much you can realistically save each month.
3. Use your existing savings to grow your wealth.
Don’t just let it sit there.
One option is to open a high-interest savings account and earn bonus interest on your balance when you meet the account conditions each month.
Other non-savings products like Finder Earn allow Aussies to earn up to 4.01% p.a. for deposits of up to $100,000, with interest paid daily.