Gen Y missing a trick on property
If younger property prospectors do not act fast they could miss out entirely on the chance of ever getting a foot in the property market, according to the accounting and wealth advisory group Chan & Naylor.
The group said Gen Y's "popular blind faith in the property bubble popping soon" served as a major hindrance to investing, adding now was the time for the hesitant ones to make their move.
However, the hesitation is not unjustified, with recent reports finding many first-time buyers were under pressure to sell their homes due to rising household costs and budget mismanagement.
Furthermore, The Economist magazine stated the Australian housing market was overvalued by 36 per cent, being beaten only by six other nations.
In a recent speech, the Reserve Bank of Australia (RBA) governor Glen Stevens warned that thinking that property prices could not fall was a dangerous idea, despite the RBA's ability to further cut the interest rates.
"They can, and they have," Stevens said.
"Simply comparing Australia and the United States, it is hard to avoid the impression that gravity will inevitably exert its influence on Australian dwelling prices."
But Chan & Naylor director Ken Raiss pointed to projections by the Australian Bureau of Statistics which show the demand for housing would rise by 15 per cent on the previous generation.
Raiss said potential investors, especially first-time buyers, sitting tight for a bubble to pop could be waiting a long time.
"According to a recent study by KPMG, 60 years ago house values in Australia stood at roughly seven times the yearly household income, and today that figure stands at a very close 6.9 per cent," Raiss said.
Raiss recommended first-time buyers adopt a more strategic approach to property investment, like using their purchase for rental purposes rather than personal occupancy.
"Property acquisition should be treated as a business process as opposed to an act of the heart, and realise that it can be a stepping-stone towards acquiring the perfect home later in life," Raiss added.
"High living standards, low and controlled interest rates, relatively high population growth, undersupply and a healthy banking system are only a few reasons why buying a property in Australia is an attractive option for personal occupancy or investment."
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