Bringing it all back home

Sally Rodrick and Brayden Hunt in their Ringwood apartment. Photo supplied by Sally Rodrick.
Is it time we stopped blaming Gen Y’s wanderlust for declining home ownership rates? Yazmine Lomax reports.

Sally Rodrick didn’t travel a lot when she was younger but since finishing high school her passport has become decorated with stamps. Now 22, she spent mid-semester breaks in her first two years of university travelling around southeast Asia before living and studying in Borneo for a semester. She has even embarked on work trips to both the United States and China.

She also owns her own apartment.

“My boyfriend and I started saving in mid-2017 when we returned from exchange and both got jobs again,” Ms Rodrick says. “I had a little bit of money from my grandma when she passed away but we’ve more than doubled that through saving … We signed our contract in October for an off-the-plan apartment to be built in Ringwood.”

For many young Australians, Ms Rodrick’s story sounds like a fantasy. But it is not her jet-setting adventures that seem unbelievable.  Gen Y Australians are racking up a combined yearly holiday tab of more than $11 billion, according to Westpac’s 2016 Travel Finance Report. This is 15 per cent more than Baby Boomers and 66 per cent more than Generation X.

Rather, it is Ms Rodrick’s property purchase that feels so out of reach; the rate of home ownership among 25 to 34-year-old Australians fell from 61.4 per cent  in 1981 to 48.4 per cent in 2011.

So could Gen Y’s love of travel be to blame?

If you listen to commentators like demographer Bernard Salt, the answer is a resounding “yes”. In a 2016 column in The Australian, Mr Salt criticized millenials for ordering “smashed avocado with crumbled feta on five-grain toasted bread at $22 a pop” as they failed to realise “twenty-two dollars several times a week could go towards a house deposit”. Hence, the so-called “Smashed Avo Generation” is seen as naïve and indulgent when their travel snaps are compared against falling home ownership figures.

However, research shows this stereotype is unfair and Gen Y overwhelmingly value home ownership. Sweeney Research surveyed more than 500 Gen Y Australians and found that 51 per cent of males and 49 per cent of females prioritised owning their own home and paying off the home loan sooner above all else. Just 7 per cent of males and 14 per cent of females gave travel this level of importance.

Furthermore, studies show Gen Y are still linking owning a home with the Australian dream. A McCrindle Research survey of 2635 Australians aged between 23 and 71, commissioned by the Financial Planning Association, found that 43 per cent of Gen Y believe living the Australian dream means owning a home. This is moderately more than the 36 per cent who said travelling was part of that dream.

Jordan Williams, 21, is just one young Australian who has long since dreamt of owning a home. She has prioritised this goal over travel and her sacrifice recently paid off; construction has just begun on her first house in Carrum Downs, purchased with her boyfriend Jake Shotton.

Ms Williams claims she began saving for a home as soon as she left high school and always wanted to “buy a house before [she] went anywhere big”.

“I’ve always wanted to go to Europe…but we wanted to get started on our lives together. Buying a house was part of that.”

Bringing it all back home
Jordan Williams and Jake Shotton’s new home under construction. Photo supplied
by Jordan Williams

Apprentice brick-layer Luke Kardos, also 21, has not purchased property just yet but is equally enthusiastic about his home ownership ambitions.

“I like to think of myself as independent and doing things for myself,” Mr Kardos says. “I’m a grown man, I’m working full-time and the next step in life – to do with work and my relationship – is to own a house.”

When asked if he is swayed by the countless photos of Santorini and San Francisco his peers post on Instagram, his answer is firm. “I personally think I’d like to do more travelling when I’m older, when I have a house and I’ve saved up money so I can afford to pay bills and go overseas for a couple of weeks. You need an anchor.”

Education student Rosie Scott, 21, also sees the attraction in having a place to call her own. While she and her boyfriend Eli Vervoorst, an apprentice chef, dream of a trip to New York next year to celebrate the completion of her degree and his apprenticeship, their primary goal is buying a house together.

“We’ve been renting with a friend for a couple of months now and that lease is going to be up in April so we’re looking to buy a house sometime next year,” Ms Scott says. “We’ve started a joint account to start putting as much money away a week as we can. We want a house as a safety…to have somewhere to stay that’s ours.”

Bringing it all back home
Rosie Scott and Eli Vervoorst outside their first rental home in Black Rock. Photo
supplied by Rosie Scott.

Clearly, it is inaccurate to say that young Australians care more about globetrotting than home ownership. But the figures do not lie; Gen Y are travelling more than their older counterparts, however they often do so for valid reasons that should be celebrated rather than demonised.

Elise Gumm, Mobility Advisor at Swinburne University of Technology’s Swinburne Abroad department, says she believes certain travel opportunities like studying abroad can actually help young people in the workplace.

“What employers look for in graduates now is soft skills that you only gain from these types of experiences – working globally, working interculturally, learning other languages, the challenges you come across when you study overseas, the independence.”

Moreover, young Australians who choose to travel simply for enjoyment should not be vilified for their choice when it is often the only realistic one. While house prices are currently slipping, the median cost of a house in Melbourne is still an enormous $882,000 and the OECD’s house price to income ratio index shows a 78 per cent increase between 1980 and 2015.

“The price of houses definitely put me off wanting to get in the property market,” says Maddy Neale, 22. Her comment comes from a hostel lounge in Prague where she is staying after taking an all-night train from Munich’s Oktoberfest. Ms Neale is currently on her second six-month trip around Europe, having already spent another half a year in the United States and Central America, two months backpacking Southeast Asia, plus a few short trips to Indonesia and New Zealand. While Ms Neale admits she personally prioritises travel over home ownership, she believes others are taking off overseas because saving to purchase property is simply too difficult.

“A lot of people put buying a car or going on holiday first because they’re not hard goals to achieve.”

So how did Ms Rodrick achieve her dream of owning a home whilst also being a dedicated world explorer? As mentioned previously, Ms Rodrick has been able to access inheritance funds and form a dual income household with her long-term partner. And while she and her boyfriend have previously rented in Hawthorn and Malaysia, they are currently living with his parents until their apartment is finished in an effort to save.

“I don’t know how we’d save as much if we were still renting. Now we save about 50 per cent of our pay,” Ms Rodrick says.

Although this pattern of saving means Ms Rodrick will not be travelling overseas in the short-term, she has plans to do so again in the future.

“Being on a trip is an all-consuming feeling of excitement and discovery. There’s nothing better to me,” she says. “We’re planning a trip in 2021 to South America for eight months. We’re going to move into the apartment, live there for a few years, and then have other people rent it out.”

Ms Rodrick has the best of both worlds but to ensure more young Australians can make their dream of purchasing a house a reality, travel must stop shouldering the blame for declining home ownership rates in this demographic. Clearly, many young Australians are willing postpone international adventures in favour of saving for a house while those who do succumb to wanderlust often do so in response to other factors such as employer demands and rising house prices.