For many people, owning your own home is seen as the Great Australian dream and a key achievement to strive towards.
Unfortunately, rising interest rates, skyrocketing house prices and the ever increasing cost of living means that dream is becoming harder and harder to obtain.
The age at which Aussies are buying their first homes is steadily increasing and, for the younger generations, homeownership seems almost impossible.
As a result, there are many Gen Zers who are questioning why they are bothering to work so hard for something that they may never be able to obtain.
There is an increasing number of young people pushing the idea that they should just enjoy their money while they can, seeing as they will never be able to afford a house anyway – with this sentiment reflected in a growing number of social media posts and videos.
A TikTok couple that recently came to this conclusion decided to spend the money they were saving for a house and travel around the world
“POV: You hit your late 20s and decide to spend your house deposit on travelling the world instead,” they wrote over videos their travels.
“We’re six months in and we wouldn’t change a thing. It was a scary decision but so worth it.”
Bella Clinton, a popular TikToker, recently shared a video of her on holiday explaining she spent her house deposit on a European trip because Sydney house prices are “overpriced and the weather is sh*t anyway”.
One young Twitter user explained the reason they spend their money on travelling and seeing friends is because they know they’ll “never own a house in my lifetime”.
“I spend it on travelling to friends, because some day that money will disappear to rent/bills anyway, and I may never have that amount again,” they said.
Another person claimed that they “have money in the bank for a house I’ll never afford”, adding that they should probably just go on a holiday instead.
All of this points to the fact that, unfortunately, home ownership is becoming a distant dream for many young people, with Finder’s Consumer Sentiment Tracker revealing 93 per cent of Gen Z Aussies are somewhat or extremely stressed with their current financial situation.
The study found that, while the average Gen Zer contributes an estimated $798 per month into their nest egg, more than two in three live month to month and around one in seven would not financially survive for less than a week if they lost their job tomorrow.
Richard Whitten, home loans expert at Finder, told news.com.au that younger Aussies face the biggest hurdle when it comes to home ownership.
“It’s a sad reality for young Australians in particular who are faced with the prospect they may never be able to own a home,” he said.
“It’s understandable that some young Australians are simply giving up on the home owning dream. Saving a deposit looks like an impossible goal, let alone handling loan repayments.”
He said that, while it is not necessarily a wise attitude, it does make sense that young people would be giving up on owning property and instead spending their money on things they enjoy.
“It makes sense that some young Australians, having given up on property, focus instead on spending what they have and enjoying themselves,” he said.
“If property is out of reach, then there’s nothing to sacrifice for financially. So you might as well enjoy your disposable income and live it up.”
An analysis of interest rates, home prices and incomes adjusted for inflation shows that Millennials and Gen Z have it worse due to the rise in home prices and low wage growth.
Gen Z have to pay up to 139 per cent of their average annual salary to fork out for a 20 per cent house deposit, with Millennials paying 122 per cent of their income.
This is compared to Gen X who had to pay 904 per cent of their salary for a deposit and Baby Boomers who had to pay just 35 per cent.
The older generation had to pay up to four times their average annual salary in order to pay off their mortgages, where as Gen Z, Millennials and even Gen Z face or have faced paying up to 11 times their average annual income for the total cost of a mortgage.
Mr Whitten said, while it was no secret that the older generations had it tough with high interest rates, buying a home is “harder today than ever”, with the overall rise in house prices offsetting lower rates.
“While home buyers in the 80s and early 90s were hit with punishingly high interest rates, house prices were much lower. Buyers back then had to borrow less, save smaller deposits and spend less of their income on housing,” he said.
“Australian home buyers today must save bigger deposits, borrow much more and face much larger repayments. This means more of their weekly income goes into housing costs today than in previous decades.”
With the gap between property prices and wage growth continuing to widen, each generation is in a tougher position than the generations before them.
However, this doesn’t mean it is impossible for Gen Z to enter the housing market, though Mr Whitten said it will require more work, creativity, family support and luck.
“There are no simple tips or tricks in the face of such high property prices and borrowing requirements,” he said.
“At the end of the day it’s always about building a realistic deposit and working out how much you can borrow without stretching the budget too far.
“Not everyone can afford property and some don’t even want to – and that’s fine. Australians are obsessed with property, but there are other ways to build your wealth.”