Millennials and home ownership – an interview with The Economiss

by Serina Bird

Is the dream of owning your own home now an impossible dream for young Australians?

Or is the problem their love of brunches, and in particular smashed avos?

I was fortunate to have gotten into the housing market in my late 20s at a time when the market was on an upwards trajectory caused, in part, by the Howard era of home owner grants.  We saved like crazy and ended up buying a four-bedroom suburban brick house as our first home. 

At the time, it felt like we were the only ones who were stuck at home on weekends saving rather than living the high life.  A big night out was home alone on Saturday listening to Neil Diamond on the cassette player (I’m showing my age here), playing scrabble and sipping on cask wine.  Fear of Missing Out syndrome wasn’t around then, but by missing out on parties at the pub we scored big time on home ownership.

But even if young people today spent evenings listening to retro classics on dated technology, could they even get together what they need to make a deposit?  And could they then afford to make repayments? I caught up with millennial blogger Kimberley Dobson aka The Economiss to ask her thoughts.

Do you feel it is still possible for young people today to afford a home?

I believe that it is possible to own a home but you need to reset your expectations for your first home. It amuses me greatly when I look back at some of the expectation, I had for my 30-year-old self. In 2007, when I was 20 years old, I had a vision board of what I wanted to achieve in ten years’ time.

Ten years later, I hadn’t met any of the goals: I was earning $78,000 - not $100,000, I was dating men online - not engaged, and I was renting and saving for a house - I didn’t own my house, I had to move away from my dream of a three-bedroom, two-bathroom, double garage home and reset this image to a two-bedroom apartment, close to a train line and within a 10km radius of the Central Business District in Brisbane. I am now on track to achieving my new goals.

How much have you saved?  And how long did it take you?

I have saved $61,559.59 and it has taken me from 13 May 2013 until 27 March 2019.  These are some key milestones:

• I saved $19,309.57 before 2017 - my first job out of university in 2011 paid $37,500 a year. I saved $10,000, moved to Australia and have not looked back;
• I worked and saved to travel, backpacking across nine countries in Asia and Europe;
• I returned from a six-month backpacking trip overseas and got a job earning $52,000 in 2013;
• I was promoted in 2016 and earned $74,000 a year.
• Between 2013 and 2016 I saved $19,309.57;
• I got serious about my budget in 2017 and saved $18,359.10 in that year alone and put an additional $4013.21 into my super – 33% of my net income.
• In 2018 I saved $23,890.92 and put an additional $4665.24 into my super – 40.5% of my net income.
• My Grandad transferred 17,500 shares in a New Zealand company when I was young (he did the same for all of his five Grandchildren). I sold my shares for AUD $33,954.45 (minus around $8000 tax). Grandad’s gift has saved me another year of hard saving and budgeting.

What are some of your key savings strategies?

• Budget and track your money - I examine my budget regularly, track my money, set small goals and incrementally improve.
• Fun vs consumer items - I focus on spending money on things that bring me joy such as overseas trips and fun activities with friends as opposed to consumer items.
• Cut your housing costs - I got my housing costs down by boarding with a friend in her two-bedroom, one-bathroom unit paying her $250 a week board.
• Don’t own a car - I don’t own a car, cycle as much as I can including for small trips and my daily commute.
• Hack your food bill - I focus on getting my grocery budget down and aim to spend no more than $40 a week on groceries.
• Look for opportunities - I seek to make any saving, however small, and have done things such as reduce my cell phone plan, hack flybuys points, collect credit card points and use travel cards to gain additional money.

As a single young woman, what challenges or issues are you experiencing in following your home ownership dream?

My main challenge as a millennial is uncertainty in the job market. I believe my generation needs to grow, hustle, train and change. I have never had a permanent employment contract and I am 32 this July. This is why saving a 20 per cent deposit for a home loan is important – as well as continuing to learn new skills to help me in the 21^st century workforce.

I need to be patient in establishing my career.  Trying to push ahead and save for a house on a low income can feel disheartening at times. After completing a 50,000 word thesis on public and private health care systems for breast cancer patients, I had to take up an entry level administration job as there was no job available in this specialist area. It was a difficult pill to swallow. I had to retrain, hustle and learn. I always visualised myself as a researcher or policy analyst, but I have rethought my vision, changed my goals, identified by strengths, retrained and now work in higher education and write about finance on the side.

You’ve been following the market closely – what do you think about housing trends?

I think the world and the housing market is continually changing. Millennial women are now outnumbering men with house purchases.

The market goes up and down all the time.

For the home you live in it is important to buy something you will enjoy and that suits your needs. Plenty of people have suggested I buy a home outside of the city; these people perhaps don’t understand what it is like to be single and dating. At the moment, my home needs to align with my life as a single professional, and for me that means buying an apartment so I can enjoy my life, go out, see my friends, date and explore my city.

It is important to think carefully and explore your budget before you buy – and only buy what you can afford. For me, that means borrowing a maximum of $280,000 which will allow me to pay back my mortgage quickly, travel and live.