Sacrifice and compromise, the reality of first home ownership: Terry Ryder

Housing affordability is at its best in 10 years, but first home buyer activity is low.

The relatively low level of buying by first timers has enabled some to claim that there is a lack of affordability, never mind the official data.

So often in real estate, observers add one and one together and come up with seven. People with a bee in their bonnet about an issue seldom dig any deeper than the surface to find what really lies beneath.

So the industry is resplendent with simplistic analysis in which myths – such as elections cause markets to stall (the pre-election rise of markets around Australia this year suggests otherwise), interest rates dictate market movements (there’s no historic basis for that), we have a housing shortage crisis  (the REIA’s city average vacancy rate of 3% and the lack of rental growth suggests we don’t) and young people can’t afford to buy – become accepted as facts.

Many surveys have been conducted on the activity or otherwise of potential first home buyers. A recent survey by RAMS showed most thought this was a very good time to buy - but most did not intend to buy.

Therein lies the clue as to why first home buyers are not exploiting strong buying conditions. It’s all about attitudes and priorities.

Many younger Australians say they have priorities other than home ownership. They want to travel, own expensive gadgets and have a nice lifestyle in their location of choice, in preference to taking on a mortgage in a less desirable location.

Others do want to own a home but they want their dream home in a premium location as a first purchase. That’s never has been achievable and probably never will be.

First home ownership demands sacrifice and compromise and the new generations are less willing to do that.

Buying a first home has never been easy, but in many ways it’s easier today than before. When I bought my first home, there were no government grants or concessions, you needed a 20% deposit and the only borrowing option was the institution you’d saved with for several years.

That first home was a shack in a downmarket suburb 90 minutes from the CBD. It was all about compromise to get on the lowest rung of the ladder. But ugly real estate grows in value, often faster than luxury property, and two years later I was able to sell the shack for a healthy gain and buy something better, much closer to my inner-city job.

I achieved something approaching my dream home on my sixth purchase.

Those who want the dream home as a first purchase are kidding themselves.

Some newspaper articles are declaring that we have a “generation rent”, people doomed to a lifetime of renting. That’s only true for those unwilling to prioritise home ownership and make the necessary compromises. It seems many young Australians prefer to rent and have the lifestyle they prefer. That’s fine, if that’s their choice, but stop telling us you can’t afford to buy.

For those willing to stop complaining and start acting, there is so much in your favour – a high level of affordability, attractive loan options from competing lenders, a leg up from government and rising markets to create equity in the future.