Millennials buying their first home might be open to new ideas but they really need to think about settling down, says the demographer.
KPMG partner Bernard Salt, who sparked the ‘smashed avocado’ debate last year, says he is “optimistic” about the future for first home buyers (FHBs), pointing to Millennials' “agile” thinking as an encouraging factor. However, in order to access the housing market, Mr Salt believes Millennials need to have a long-term vision.
Speaking to The Adviser, Mr Salt explained that Millennials aren’t necessarily looking for “a three-bedroom brick veneer on the edge of town” and are considering purchasing property with friends rather than partners.
He said that this flexibility of thought will serve them well in a challenging market, but added that with rising housing values and competition, particularly in Sydney and Melbourne, Millennials “need to be settled”.
“Like it or not, Australia is going from 24 million to 40 million people over your lifetime, generation-wide.
“That means that the value of housing must increase over that time frame. If you miss out now, it's not going to get easier – [housing prices are] not going to suddenly decline in the 2030s.”
However, Mr Salt added that society was much more “mobile” than ever before and questioned whether Millennials are as interested in purchasing property as their forebears, regardless of affordability.
“If housing was more affordable in Sydney it would certainly encourage some people to buy, but I think there's still a lot of people in that generation that would say ‘no, even if it was affordable, I don't know whether I would want to remain in Sydney for another five years. I might end up going to London or Shanghai or Mumbai’,”
Commitment to living in one place is one of the biggest barriers
The demographer warned that a lack of commitment to living in one place is one of the biggest barriers for young home buyers.
“You've got to actually have a sense of stability over the next 20 to 30 years. I think in Melbourne and Sydney, there's a fair range of lifestyle options. You don't have to decide which particular suburb but [FHBs do need to] commit to staying in Sydney or Melbourne and if that's the case, then the earlier you get in, the better,” Mr Salt said.
His advice for FHBs is to “find a city that’s growing and get in at the bottom level, be disciplined, be focused, work together with a partner.”
The high-profile demographer achieved international fame in 2016 for suggesting in a satirical piece that FHBs could save for a deposit quicker if they eschewed weekly smashed avocado on toast at cafes.