How millennials are affording to buy their first homes
Australians are buying homes less and less, as research from the Australian Institute of Health and Welfare (AIHW) recently indicated. This could be caused by factors that millennials are dealing with more and more, such as economic constraints like student debt or a market downturn, lifestyle choices and working from home, all of which may restrict their home savings.
However, while home ownership among those in their late twenties and thirties may be dropping, an ING survey showed that a third of this generation are saving to buy a home in the next three years.
So, with the restraints millennials are facing, how can they still afford to buy their first homes in the near future?
Millennials are often known for their live-in-the-moment attitude, and other generations assume that they would prefer to buy an expensive dinner than save for retirement or buying a home. And the AIHW report does indicate that home ownership in Australia is down from 71.4 per cent of households in the mid-1990s to 67.5 in recent years.
However, it turns out millennials are saving more and making lifestyle choices that affect their future positively, as data from Westpac Life shows.
The report indicates that the most common savings goal for customers between the ages of 25 and 34 is saving for a down payment. And in fact, the amount of money that is saved within this age group that is related to home buying is ten times more than savings for any other goal.
ING data also shows that 57 per cent of millennials are cutting their spending on going out to eat and other luxuries in order to make these savings contributions.
So, as it turns out, millennials may be more present-oriented today than the previous generation was at the same age, but they are still conscious of savings goals and would like to buy a home in the future.
What will the future look like?
With recent reports of an impending economic downturn in Australia and a housing market decrease, it’s unclear whether millennials will see all of their savings come to fruition. Rising interest rates on student loans, for example, could counter the lower housing prices that may occur.
However things end up, millennials are still saving for that down payment, even if they have to save for a longer period of time before affording the home they really want.
If you have questions about first-time home buying or home loan options, contact the team at Premium Portfolio Finance today for more information.
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