6 O’clock on the Life Clock

Posted by Luke Graham

Low interest rates are all the jazz and we have recently gone into how this record-breaking phenomenon affects the property cycle. Lower interest rates are very effective at prompting people to buy property.

Over the most recent property cycle, we are observing that a stronger majority of mortgage loans are for investment purposes and first home buyers are not as active as they usually are. ‘Normally’ around one in five mortgages are classified as first home buyer, but the current trend is approaching half of that.

Where are these would-be first home buyers? According to the Australian Bureau of Statistics, homes purchased by first home buyers average $300,400. This definitely pushes them well out of most of our capital cities and results in many home buyers compromising on both size and location to afford their own home.

Consider these trends:

International travellers have doubled over the last 20 years.

Almost 1 in 3 Australians were born elsewhere and half of Australians’ parents are not Australian.

It is now expected that people will shift careers on average 7 to 9 times.

‘No Religion’ now only has to topple Catholicism to become the top ‘religious affiliation’.

The average age of first marriage has increased by 7 years since the 1970s, and so has average age of first home buyers. Divorce rates have skyrocketed.

30 years of age is now seen as the ‘norm’ for a woman to begin having children.

By combining the above we can come to a specific determination: information and knowledge have influenced a growing and changing western culture where we are becoming less committed to ‘traditional’ values and increasingly committed to innovation and what we want from our own lives.

Considering this, a young player must remember that the Great Australian Dream might not be exactly how it was defined by generations past where the purchase of one’s own home was of foremost importance.

We now have enough information and services at our disposal to both have our cake and eat it too. Today’s generations can rent a home where their lifestyle desires while also buying, holding and growing a property investment portfolio. This was always available, just never really considered until now.

Even as somebody committed to the status quo, an Australian has the opportunity of at least twelve years of adulthood (18 – 29 years of age) to establish and secure their future before commitments like their own home, marriage and children begin to loom over the horizon. Hopefully by then we have accumulated enough wealth to buy our own home exactly where we want.

The time gap between adulthood and the onslaught of responsibility is what could be defined as the ‘opportunity stage’ of one’s life. If we adopt the property clock in this reference we know that there is less activity but most to gain from this stage but that, unlike the property cycle, 6 o’clock in life is easy to find. Use it!