AUSTRALIA: A 75-year-old Sydney man had blunt advice for young Australians struggling to enter the property market. While the rising cost of living and soaring property prices have left many feeling discouraged, this baby boomer believes the issue lies elsewhere. According to him, the best way to save was to look at what people can cut out of their lives.
Yahoo Finance reported that in an interview with a young reporter from Coposit, an interest and cost-free property-buying payment platform, the 75-year-old Sydneysider pointed out lifestyle differences between his generation and today’s youth.
He noted that the pressure to maintain a certain style today, with branded clothing and costly coffee habits, “costs money”. He said, “You’re wearing a brand t-shirt. We never bought brand t-shirts. You’re wearing brand shoes. We never bought brand shoes.”
He also shared that they used to bring coffee from home, whereas now people spend AU$4 to AU$7 (S$3.40 to S$5.94) at cafes. He added that the absence of streaming services and expensive mobile phones during his time also made it easier to save. He said, “For young people today to manage that lifestyle and to save for a property at the same time must be difficult.”
The man said that he had not assisted his children financially when they were entering the property market and that they “had to do it the hard way”. “We taught our children how to budget, how to economise, how to do this right and they were very independent,” he said.
How he saved AU$2 million and why it’s tough to replicate it with today’s steep property prices
He recounted starting with a modest two-bedroom apartment 25 years ago. As its value increased, he used the equity to buy more properties, eventually building a portfolio of ten homes, which he has since sold.
His property investments, work savings, and share market returns grew his wealth to AU$2 million (S$1.70 million). However, he acknowledged it’s tougher to do the same today due to soaring property prices.
He explained that saving an AU$200,000 (S$169,768) deposit for an AU$750,000 (S$636,630) property today is challenging with regular wages.
The financial landscape has indeed shifted. According to Finder data, the average loan amount in 1984 was AU$42,277 (S$35,886), equivalent to AU$154,641 (S$131,265) today. By 2023, the average home loan size had risen to AU$802,357 (S$681,073). In 1984, a loan was just over twice a person’s annual income, but in 2023, it was 6.4 times the average income.
Although interest rates were higher in 1984 at 11%, compared to 6% in 2023, the monthly mortgage payments have skyrocketed. Homeowners in 1984 paid the equivalent of AU$1,529 per month (S$1,297), while those in 2023 face payments of AU$4,809 (S$4,082).
However, he claimed that “there is no cost-of-living crisis” and a change in priorities could ease getting into the property market.
His views have been criticised on social media, where many pointed out that even after cutting their spending, they still struggle to save. One shared that he doesn’t drink coffee or wear branded clothes, while another said that he makes six figures yet can’t afford a house.
Mortgage broker Jess Phillips told Yahoo Finance that while “there’s a cost-of-living crisis for some people”, she was surprised to see her clients spending AU$500 on takeaway food or AU$200 a month on TV subscriptions.
“Doesn’t seem like they’re in a crisis to me,” she remarked. She added, “I think people are definitely probably dipping into their savings a lot more.”
She noted that while mortgage payments have risen, making it harder to save as much as a year or two ago, people are spending freely. “The shopping centres are full. People are going out. Restaurants are full. The casino is busy. Gambling is high. People are going on holiday.” /TISG
Featured image by Depositphotos (for illustration purposes only)