What is the first step on your wealth journey?
Financial experts are currently warning younger people that unless they are able to invest much sooner than their parents, they may well be left behind on their wealth creation journey.
Several factors are combining in today’s investment market that make it harder and harder for young families to get ahead.
First, there’s the asset class of choice: Property.
Australia’s favourite and best-performing asset class is also the most expensive. And therein lies the problem. Once you have your first property, it can effectively—and rather easily—anchor your entire investment portfolio.
It’s what leads John Hewison of Hewison Private Wealth to declare that there is “no question” home ownership has added enormously to the personal wealth of most Australians.
But home ownership is becoming so unaffordable in Australia’s two largest cities, that the younger generation are really struggling to get their own home.
Interest rates are at record lows, but banks are super tight on lending, making it extremely difficult to service the level of borrowing most first home buyers need.
The main issue seems to be the way the government incentivizes property investment as an asset class, rather than something home owners can take pride in as they create their version of the increasingly elusive “Australian dream”.
Until the government manages to balance the priorities, by disincentivising property investment, and promoting more owner occupiers, the situation is unlikely to change (and will probably worsen).
The situation is even worse for young families, where lending criteria really puts a stranglehold on further investment.
So what’s the solution?
Will the government continue to support property investment, under the guise of supporting the building industry and thereby creating more affordable housing?
That’s extremely unlikely.
With a government that generally tends to favour property investment (which makes one suspicious that a large proportion of politicians may well be landlords), investors, especially those in their early twenties, are left with a simply choice.
Find a way to acquire your first home, or be left completely out of the market and watch the prices rise inexorably.
It may seem unfair, but if these are the rules the government has created and enforces, then you can play the game and win, or sit on the sidelines (and lose).
If you need help working out how to acquire that elusive first property, we need to talk to you. There are a great deal of creative solutions that can get you into your first home, despite government policies and bank lending constraints.
So why not get a full evaluation of your options by starting right now?
Contact us on 1300 878 898 and we can start your journey. Find out exactly where you’re at and what you could achieve over coffee with one of our expert team.
Call 1300 878 898