Generation Rent in Sydney?
Lately, I came across an article which talks about the rising tendency of Australian youth towards renting/leasing property rather than buying it. You can read it here.
The article shows how there is a complete shift in ideology- while the past generations believed in buying properties, youth today looks towards the ‘rent’ option. Actually, with career becoming a lot more important, our youths want to live close to their workplaces. In these times when jobs change so quickly, it becomes a big problem to be tied up to a home that may be many miles away from your new workplace. Also, moving through traffic mess and missing out on the inner-city (CBD) community culture is not acceptable to them.
Because interest rates are higher than rent, today’s generation wants to skip that extra charge. They feel that “Interest paid to the bank is as dead as any rent money.” Statistically, Switzerland, one of the most buoyant economies, has least number of homeowners. The new generation argues that sometimes, high number of home ownership is just a camouflage for poor economic growth.
I am willing to agree with most parts of the article. I also think that high deposit cost is among the big reasons why the new generation looks the ‘rent way’. With Superannuation set to be 12%, those in their 20s and 30s will have a lot of money to buy homes upfront when they get old.
Also, homes come with a fair probability of Foreclosure or Short Sales. Why take that extra emotional burden along?
There is another point worth noting- With rising demands in rental property near CBD, investors can also have a field day in my opinion. Good for buyer-seller dynamics!
I invite your views on the topic.