Redefining the Australian dream

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The Australian dream was simple when our parents were young. They’d get jobs in a handful of sectors, buy a humble brick home in the suburbs for less than $100,000 and have a couple of kids. Four television channels and board games provided entertainment. On weekends friends were invited around for barbeques. To communicate with people outside the home people used telephones that were connected to the wall. Our parents certainly couldn’t have predicted that their millennial children – born between the early 1980s and mid 1990s – would grow up to be digital natives whose own aspirations would be entirely different. After spending super chilled summers running around under the sprinkler in the backyard, we must come to terms with the fact that a bit of lawn and enough room for a Hills Hoist may no longer be a given when we have families of our own.

We want our own digs like our folks did, but we’re constantly reminded that the property market is almost impossible to crack. In the June quarter, Melbourne’s median house price jumped 3.5 per cent to $668,030 according to the Domain House Price Report. That’s a pretty off-putting number for those completing a degree, racking up debt and just beginning a career.

You could forgive millennials for being pretty shady about their prospects, and yet, we’re optimistic about the quality of life that lies ahead. With home ownership off the cards, we’re postponing serious adulthood and getting far more life experience than our parents did before they locked themselves into mortgages.

Amy Hastings, a 20-year-old university student, is more interested in globetrotting than laying foundations in any one place. ‘My parents encourage me to travel, learn and explore in order to gain life experience so that I’m more equipped to handle whatever life throws at me in the future,’ she says. Wise words – she might not be ‘in the market’, but Hastings is wasting no time gathering worldliness. She’ll measure her success in many ways including happiness, health, annual income and job satisfaction. But what if someone did hand her one million dollars? ‘I’d definitely put a lot of that money towards travel,’ she says.

It might seem irresponsible to pour hard-earned dimes into making memories, especially when it’s harder than ever to accumulate assets, but Deakin University’s Head of Economics, Professor Pasquale Sgro, says we’re only beginning to see the impact of the millennial philosophy of life. ‘The next generation will build wealth, but they won’t do it via housing,’ he argues.

According to Prof. Sgro, we’re better educated than our parents, so although we may appear frivolous at times, he’s sure we’ll wind up with more than Instagram snaps of our travels when we get old. ‘Culturally and socially we’ve been sold on the idea of having a house and security,’ Prof. Sgro says, but adds that the next generation of investors will think beyond the picket fence and put their income into profitable activities, commercial properties or shares. He suggests that bright digital natives are more entrepreneurial. We’ll use our skills for start-ups and invest in business ventures. ‘Gen Y is mobile. They have better things to do with their money than have it sitting in a house,’ he says.

 

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'Gen Y is mobile. They have better things to do with their money than have it sitting in a house.'

Professor Pasquale Sgro,
Deakin University’s Head of Economics

True as that may be, where will we live if we’re not buying homes – will we be beholden to landlords for eternity? Prof. Sgro suggests that if people have the funds, home ownership does still provide security, but there’s nothing wrong with renting and putting money elsewhere.

The Victorian Government is currently considering a European-style approach to renting. The review they’re conducting will explore the viability of 10-year leases, which would in turn provide long-term security for tenants.

Economist Brian Haratsis suggests that millennials shouldn’t rule out owning a home entirely, but it may take longer to get into the market than it has in the past. ‘The big issue now is your deposit,’ he points out. ‘If you look at what the future repayments are, it’s not that bad compared with the past. It’s thinking creatively about how you get your deposit so that you can enter the market.’

He says if you need $60,000 for a deposit and can’t save it then you should get into the share market. Safer bets like BHP, Coles and Woolworths will enable people to accumulate wealth over time. ‘As you move through your financial life those shares may form part or all of a deposit for an investment,’ he explains.

Haratsis argues that we’re in need of a significant property policy overhaul. He highlights Western Australia’s shared home ownership scheme. The government gets 25 per cent of the property when it sells, but it kicks in a share from the department’s lending agent, helping people to get into their own place. ‘They’re the kind of programs that we need for this age group to get into the market,’ he says.

It seems that uncertainty is the only certainty for millennials, but if any generation is equipped to handle it, it’s this one. In just two to three decades, everything about the way we live, talk, learn and work has changed and we’ve rolled with it. We master sophisticated new technology while our parents struggle just trying to turn devices on. We consume news, Snapchat friends and order new clothes online in a matter of moments. It’s likely that we’re going to evolve constantly in our lifetimes. Our definition of what it is to be wealthy will be different, but we’ll still put a couple of snags on the barbie with friends when we have downtime – with or without a backyard to call our own.

 

 

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Professor Pasquale Sgro
Professor Pasquale Sgro

Head of Economics, Deakin Business School, Deakin University
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