For millions of Australians, saving for a first home has been a financial rite of passage, but more and more of the younger generation believe the great property dream is dead.
A severely inflated housing market has pushed an unprecedented number of millennials – Australians born between 1981 and 1996 – to opt for the more flexible stock market to secure their financial futures.
A survey published by the Commonwealth Bank revealed that millennials comprised more than two-thirds of the 1 million new customer accounts opened on its CommSec trading app since the start of pandemic in February 2020, news.com.au reported.
Of those customers, 43% said they would rather invest than spend their money, with 38% of that figure opting for the stock market over the traditional path of saving for a property deposit for long-term financial security.
The statistic came as no surprise to millennial retail investor-turned podcast superstar Bryce Leske, co-founder of the popular Equity Mates podcast, which aims to help ordinary Aussies navigate the world of finance and investment.
Since the launch of his podcast in 2017, he’s seen a huge uptick of younger people turning to shares as opposed to brick-and-mortar investments like real estate.
“When we first started the podcast, investing felt like something that was out of reach for everyday Australians… It was dominated by this idea that you’d just build wealth through housing,” Leske told news.com.au. “If you think about the costs involved with putting together an enormous deposit, shouldering legal costs, stamp duty … the price of housing ends up being well out of reach for so many people.”
Leske said some of his clients had deposits in excess of $100,000, but were still unable to secure a home loan. As a result, more and more potential homeowners were looking towards the share market to “make their money work.”
Ben Spoor, 27, management consultant, found investing in shares a far more appealing option due to the sting of additional costs involved with locking in a first home.
“I crunched the numbers and owning shares is easier and better for me than an investment in property,” Spoor said. “Investment properties are a pain and have lots of costs people forget about. Owning shares (index funds, not direct shares) is set and forget.”
For Brett Hall, 35, the risk of being leveraged into a volatile mortgage repayment plan pushed him into focusing on the share market for the financial security of his young family.
“[My wife and I] weighed up the question of property but we really didn’t want to flirt with mortgage stress,” Hall told news.com.au. “Shares are liquid – if we want to buy a house we can sell our shares and get a deposit… It’s very hard to go the other way – the entry and exit risks are much higher. People sometimes say rent money is dead money, but I would say interest is the same. So what kind of dead money do you want to be paying?”
Hall also opted to kickstart his son’s financial future by investing in shares.
“We just set up an ‘informal trust’ for our son,” he said, referring to investment accounts that can be invested on behalf of minors. “You can start buying shares for $500 and you’re in, you’re doing something, as opposed to waiting until you have a couple of hundred grand before you put down a deposit.”
