Affordability Pressures for First Home Buyers or a Generational Choice?

property investment melbourne - rental demand








Melbourne Property Watch

Here’s an interesting view on current housing affordability. It’s a different take on first home buyers and the perceived declining affordability, suggesting it’s more a lifestyle choice for younger generations who prefer to rent in the inner city suburbs rather than buy their own home.

I think this is good news for property investment in general, and for the developing investor in particular, as not only does this point to increased rental demand into the future, but the new rental property you develop might just be more attractive and therefore more rentable than an older one in the same area.

Another interesting point is that while the younger generations are renting inner city, they are still buying investment properties, albeit in less expensive locations. That gives them the opportunity to still get into the property market, which I think is probably the most crucial step you need to take if you do ever want to build additional wealth through property.

Why? Because property investment gives you leverage on your hard earned money, and the more leverage you have, the greater your financial advantage into the future.

But why would I want additional wealth? I’m happy with my current lifestyle!

One thing that continues to play on my mind is when the time comes for retirement. So often this topic comes up in the media and I think is this something I really need to consider right now? I’d rather not because I have so many other things to worry about.

Unfortunately when I compare the current main sources of retirement income (pension & super) with my household’s current cost of living, it concerns me a little. Like others, I personally would like to live my retirement years comfortably, but after ‘crunching the numbers’, I’m not sure that will be possible without additional sources.

Worse still, It is believed that superannuation will one day replace the pension completely, meaning I may need to rely on super alone, but under the current rules, if you relied solely on the employers contribution to fund your retirement, you are likely to fall very short if you are planning on continuing your current lifestyle. Yes there are options to make additional contributions yourself to help increase your super balance, but this may not work for some considering there are options which could provide better returns.

There is no question that our future generations are creating a major shift in life’s priorities, and in a way re-defining the ‘Great Australian Dream’. Whatever that dream is for you, property development and investment can help you build that additional wealth you may be looking for.