To live in yes, but as an investment not so much. I have both moral / philosophical and financial issues with the latter. ETFs are turning out to be the millennial version of what property was for the Boomers I think.
I think because decent property is out of reach for many millennials (i.e. ok build quality, size and proximity to CBD), there’s a whole bunch who are just calling it quits and looking for other investment options which suit their means and enable them to still rent somewhere closer in which aligns with their preferred lifestyle.
That said, for the millennials who can afford it, there is still plenty of heat for desirable properties. Overall I see a potential decrease in demand for McMansions 20km+ from the CBD, as some of those who previously might have been desperate enough for a house to take that route are turning to ETFs and rent as a lifestyle choice.
Not to sound too sceptical but always consider the reasons why property articles are written and who has an incentive for the market to move in said direction. Property developers have very deep pockets and it wouldn't be unheard-of to pay a PR firm to create buzz around apartment living if it suits their interests.
That's a good point. There may well have been some bias there.
But that said, I feel it is true that people are valuing convenience over size more (just based on the people I know IRL) so I think there might be some truth to it.
>ETFs are turning out to be the millennial version of what property was for the Boomers I think.
Millennials are jumping on board the gold rush, buoyed by an artificial, government stimulus boosted increase in asset values with scant regard for the fundamentals of the underlying asset class?
Yeah if you spend a lot of time on this sub you could easily assume everyone invests in ETF's, just like if you spend any time on /r/Australia it sounds like Australia is a third world country where everyone has 50k of hecs from their arts degree and still lives with their parents at 40.
I've had two or three fortnights of being paid by centrelink. It's sometimes annoying, sometimes ridiculous and that's not including robodebts. On the other hand I'm sure there are people who complain about being expected to try to find work.
Millenials are definately not jumping on the ETF bandwagon. 99% of people that I know at work and uni live paycheck to paycheck and are caught up in so much consumerism that I doubt they have any savings to invest.
source: I'm a millenial
Artificial government stimulus: record low interest rates and QE in majority of the world - I would call that one a yes.
Scant regard for the fundamentals: again in a lot of cases I would say yes. Ask your average ETF buyer how to value one of the companies on the index funds they buy and I bet you’ll get a blank stare.
Not that I’m criticising it, I do the same but you gotta admit the similarities.
> Ask your average ETF buyer how to value one of the companies on the index funds they buy and I bet you’ll get a blank stare.
I invest in ETFs because I don't know how to value companies and I'm not interested in learning.
yes, i agree. Learning valuations isn't easy (see a lecture on valuations here https://www.youtube.com/watch?v=32oabRFnplQ - it's quite interesting, but this is but just the beginnings).
ETFs allows people who don't have the time nor energy to invest, and obtain average results (market results) for as low a fee as possible. And somehow, it also beats most actively managed funds after fees.
Alan Kohler argued one of the problems is that you're essentially investing in companies just because they're large, which therefore makes them larger, and the cycle goes on.
Personally, I invest in LICs because they make an active decision about what they invest in.
The difference between a LIC and a mutual fund is that LICs are listed on the ASX, whereas mutual funds you need to invest directly into the fund itself.
so as a disclaimer, i m not a fiduciary financial advisor, and take no responsibility for any actions you take. I m merely describing what I'm doing, and why.
ETFs in the past 10-15 yrs have been more and more popular, because of their simplicity and ease of trading, as well as diversity. Not all ETFs are the same, and there are some that are riskier (since they concentrate their stocks in a particular market segment or industry).
But realistically, you can't go wrong with the vanguard broad spectrum ETFs like VTS or VAS (for australia only shares). But even better imho, is their diversified fund of funds: e.g., VDHG. See [this page](https://tool.vanguardinvestments.com.au/mstar/au/fundcompare.htm?site_code=adv##target=fct&selectedFund0=F00000ZS2F&selectedFund1=F00000ZS2H&selectedFund2=F00000ZS2I) for the diversified fund of a fund. These fund of funds (meaning, it is a fund composed of other vanguard funds) contain a good mix of everything, in a "correct" ratio for a particular risk level - high growth is higher risk, balanced is obviously balanced (it's lowest risk of the three i linked), and the diversified (not high growth) is middle ground risk. The risk is related to how much of the money is in stocks vs how much is in bonds (a fairly "safe" asset, compared to stocks, but growth is low). As a young'un, you have lots of time, and so even if the market crashed right after you purchased, you'd still have time to recover, so a more risky mix _ought_ to fit your time-frame (i'm assuming you don't need the funds invested for some 10-20 years).
I have listed ETFs - which you buy (and sell) using your stock broker. If you're going to want to constantly drip some money in, the stock brokerage cost can add up. Plus it's hard to automate this - you'd have to manually login online every month to do it. Vanguard has the equivalent funds not as an ETF that's traded, but as a [mutual fund](https://tool.vanguardinvestments.com.au/mstar/au/fundcompare.htm?site_code=adv##target=fct&selectedFund0=F0AUS05C62&selectedFund1=F0AUS05GX8&selectedFund2=F0AUS05GX9) (like your super fund) that you can setup an automatic Bpay payment to invest into. This allows you to automate the investing process, just like paying bills. It's slightly more expensive, but you don't pay each time you buy into the fund (unlike ETF, which you pay a brokerage fee).
also, don't dump everything in - keep some emergency amount for, well, emergencies. Then, in 10 year's time, re-evaluate how much risk you're willing to take (eg, you may need a deposit for house etc).
I currently have about a third of my cash savings sitting in a mutual fund simply because it's zero fee up to $5000. That I do drip money into every other week or so.
My understanding is that in the vast majority of cases, fund managers can't consistently beat the market. So I'm not really seeing any downsides to using ETFs over a mutual fund, with the exception of not being able to pay into it as often. So I'm really just better off saving up a lump sum to invest, then picking some ETFs I like?
> picking some ETFs I like?
as long as those ETFs are diversified ETFs. Don't buy random, or industry specific ETFs like https://au.finance.yahoo.com/quote/AMLP?p=AMLP or low diversity ETFs.
For the vanguard ETFs have an equivalent mutual fund version that is _exactly_ the same investment. Use those instead of the ETF for small drips should save you on transaction fees (which is significant at low investment amounts). However, the vanguard mutual funds have a _slightly_ higher fees vs their equivalent ETF (unless you can switch over to the wholesale version of the mutual fund).
>I currently have about a third of my cash savings sitting in a mutual fund simply because it's zero fee up to $5000.
Is this Spaceship? Or something else?
I started learning fundamental analysis, its kind of daunting for someone without any financial business background and I actually managed to pick a banger of a stock a few years back which grew from 500 to 3000 in 3 years, but Im scared that that was just beginners luck and if I were to pick any more they will fail miserably, and I dont particularly want to keep up to date or learn any more about fundamental analysis so Ill just stick with ETFs.
It's almost certainly luck. There's plenty of examples that suggest that there is almost no such thing as a portfolio investor that isn't lucky [this](https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.2010.01598.x) suggests that there are very few investors that beat the index and those that do are too high fees. While [this](https://onlinelibrary.wiley.com/doi/full/10.1111/j.1540-6261.1997.tb03808.x) finds that "The results do not support the existence of skilled or informed mutual fund portfolio managers". Granted those pertain to the US stock market specifically.
Basically even the people who spend 60 hours a week at this stuff and are the top of their game can't beat the index over a statistically significant amount of time. Picking stocks is still fun it's like gambling with better odds so don't let me stop you.
Hey thats exactly how I invest. Trump makes some claim. US stocks drop. I put some play money towards whatever Vanguard V_S acronym covers Murica. Repeat a few more times through 2019. Really should look more into it though.
> Scant regard for the fundamentals: again in a lot of cases I would say yes. Ask your average ETF buyer how to value one of the companies on the index funds they buy and I bet you’ll get a blank stare.
I don't think that is a requirement, heck that is the point of ETFs: diversification with minimal expertise. And in addition also the point of markets: no one knows how to value resources so let the invisible hand of the market guide the price to a fair value.
Definitely hugely positive.
Many of my boomer and older Aunts are drastically fearful of shares because I think they got scammed into buying something stupid at high prices a few decades ago.
I think that simple ETF indexing would have changed everything and they would be 5-10x wealthier and have zero concerns about money.
Didn’t say it was and I agree with you.
I was simply responding to the other poster and my only point was that people buying for the most part aren’t doing it because they have some grand view on the fundamentals and the ETF aligns with their strategy, other than maybe: in the long term the market moves up.
Most professionals struggle to value companies anyway - there is a huge amount of guesswork involved.
Most millenials at my work dont have clue about ETFs and think that shares are 'risky'
One of my co-workers at a previous job (fairly young, mid-20s) mentioned in passing that she was thinking of investing, so naturally I was intrigued and asked her what her plans were. She said she wanted to slowly invest small amounts somehow (like $50 amounts) so I pointed her in the direction of microinvesting apps like Raiz and Spaceship and Pocket so she could check them out herself, since she hadn't heard of them before (also stressing that I wasn't offering financial advice or specific recs etc but just giving her some links to check out and that she should always do her own research).
About a month after that conversation, she came back to me and said she put in some money for about two weeks, and it went up 1c, and then dropped 1c, so she didn't make any money overall, and she pulled everything out of the account. :X
Another co-worker, late-20s, was shocked when I said I'm leaving my investments to compound for 2-3 decades. "But you'll be old before you can get the money!" Maybe another issue is that there is a tendency to want to see great returns, in a short amount of time? But to be fair, at my former workplace, the base payrate was a couple of dollars up from minimum pay, and many people who worked there were either doing multiple jobs to earn enough money, or living from paycheck to paycheck so that could explain their impatience of wanting to see money/results fast from investments.
That’s all the response I get when I tell people to put more money into super.
“Oh I did salary sacrifice $50 but my super balance didn’t change so I stopped it”
Compounding interest (positive or negative) just isn’t for everyone to understand.
I think most people can understand it, but if you’re living pay to pay the value of having that $50 a week in the pocket is too high vs some nebulous future self having more money.
Every time I look up 'How to do value investing', it just seems like a whole lot of smoke and mirrors, and people just make a gut decision anyway.
There doesn't appear to be a formula into which you can plug all the company's numbers, and then get outputted a 'true share value'.....and if there was and everyone used it, I don't know what what happen with the share market.
Are people really living longer into their 90s/100s or are fewer people dying young? I always thought that life expectancy increases was mostly down to the latter
They are 2 different things really but yeah retirement villages are nice. Aged care is often once you can't take care of yourself and home care is inadequate.
That being said there are some 5 star places which are like hotels and have very limited government funded spots.
When I calculated it once, using some rough estimates (and things can swing either way depending on the details), renting can be on par with a mortgage if you invest the money you save by renting through your life.
The advantage with a mortgage though is it's kind of like a forced saving plan. Harder to be disciplined when you don't have to be. And so I would guess that many who rent are also not saving, and therefore can barely afford rent when they're retired, which is going to be very hard.
The other thing about renting is that you might rent a place that's nicer than the place you would be willing to live in if you were buying, and that reduces (or eliminates) any excess income you might keep over having a mortgage.
For sure. There are lots of factors that can impact either way. It might be that if property prices stagnate, more of them become positively geared, which could mean less to be saved renting vs mortgage (correct me if I'm wrong).
Things like interest rates, rental prices, stock growth rates, inflation, etc, all factor into this and make it hard to predict, so I just picked some values that seemed reasonable and representative of the current state of affairs.
I think the problem you're describe is what superannuation is for. Even someone on a modest income for their entire life in a poorly performing super fund should have enough in their super to at least cover the rent for their retirement.
Likely they had minimal super throughout life due to it not being mandatory for workers for a large portion of their life, and still not mandatory for business owners, unless they pay themselves a salary.
Selling the business was likely their retirement plan, but it went bust.
By being born too early for compulsory super or for trying to grow their incomes and the country by being entrepreneurs, even if not successful?
You don't sound sympathetic.
This is not a renting vs owning problem, it's an investment/income stream problem.
People seem to forget that being on the pension and owning your own home has an opportunity cost on the cash/equity in the home. That money could be in a business or shares, bonds, term deposit and be just as well off and stable if not more so than the home ownership option
although as you get older, the thought of having to move when the landlord kicks you out for whatever reason is hard. It's workable when you're young and can move quickly. But as an old pensioner, not so much.
Owning your own home gives you the security you'd want imho. Tho they pay a price for it.
Although owning your home with a pension is worth a lot.
Non home owners (couples) can only have $210k more than homeowners in assets before they start losing the pension. So that additional $210k needs to produce enough income to cover rent (over the cost of owning the home) in order for the couple to be as well off
*however* the income test for the pension cuts in at $7800 per year
So if your rent is greater than $7800, then unless your additional income is greater than your pension loss, you are much better off as a homeowner on the pension.
If you aren’t on the pension and your choice not to own a PPOR resulted in a post tax increase in income greater than the cost of rent - then financially you are better off
(Not all decisions are financial)
When I talk with people, this does often get forgotten. Some talk about how much cheaper it is to own now they've paid off or nearly paid off their home. They don't seem to remember that if they sold their house and rented, the income they could produce from the money from the sale of their home would offset their rent costs.
I want to @#$%ing scream at headlines like this
I'm a decade+ older than them and I still know exactly what they're thinking
The correct god damn headline is "Due to atrocious government policy, protecting investors, local and foreign, Millennials can not *afford* property"
Are you reading the content? Cannot afford it is the rational. The conclusion is that the millennials are going elsewhere. So the title is just fine.
The key is to define how many millennials ... some, many, most? If 30% plus then that must be significant and have impact on property in the longer run
My 30 yo brother bought a property with no parental support by working at KFC at 16, and Woollies at around 20 through uni and being a tightass. Somehow his wife did the same (before they were married).
Buying a property and affording a property are very different things.
I know someone who between him and his parter earn around $140000 p/y but they have a mortgage of close to 1.5 mil. They bought a house but there is no way they can afford it
>They bought a house but there is no way they can afford it
Did they *say* that money's tight or are you assuming this? Because I certainly don't give out my full financial position to mates in casual conversation.
I don't understand this millennial narrative. I bought one for 450K at 28 after my partner halved her income and we left home at 19. I am at 40% equity after 5 years with no investments or fancy techniques. My peer group is similar to me. (No we aren't super high earners, bought at around 100K household income in a capital city, 20min drive from CBD)
It's mainly people who live in Sydney who think the whole country is expensive. I bought at 21 in a regional town and that wasn't even anything extraordinary as prices weren't crazy where I grew up, most of my mates bought at similar ages like 21-26.
I think the biggest failure of successive governments has been no planning to decentralise our white collar jobs to 'rural hubs'.
There's some fantastic towns throughout Australia that _deserve_ a larger white collar economy - but there's little incentive to bring a work force out there (in fact, they're usually paid less as the cost of living is reduced)
I'm not an LNP fan for several reasons - but the recent move to attempt moving some government departments to rural hubs was the direction we need to head towards.
The harsh truth of it is that while there are some very liveable and lovely regional towns out there, businesses don't want to move there. Businesses usually don't even want to move outside of the central area within a city, let alone to a place hours away. We can spend the huge amounts of money required to subsidise and prop up areas to make them more attractive but it's really not a great return on investment from a government perspective.
Governments have moved departments to regional hubs before and they've moved quite a lot of them back to cities because the market forces just aren't there. You don't have good access to labour, people don't particularly want to move there even with the cheaper cost of living, you aren't connected with any of the other industries or agencies, you are disconnected of what is happening in a market, you have minimal supporting infrastructure ect ect.
That's not to say we shouldn't support growth in our regional centres, we should, but they're a long, long way off providing genuine alternatives to capital cities and the money required to prop them up makes it unfeasible. Big economic hubs don't happen by accident, it's where businesses succeed and want to be.
If the problem is that housing is too expensive we have a lot of policy tools available to put downward pressure on houses without spending tens of billions in infrastructure to prop up unattractive regional centres. But we don't do that because the government doesn't really want to put downward pressure on prices.
I mostly agree - but there's plenty of feasible cities like Newcastle, Wollongong, Geelong Gold Coast that have a lot of the size and features needed to live comfortably, proximity to a capital city - but absolutely no jobs in white collar industries.
Bizarre and a waste.
It's a whole lot easier to build better transport links between those satelite cities and their city anchors so people can comfortably commute than it is to try and force professional jobs to move up there.
> I'm not an LNP fan for several reasons - but the recent move to attempt moving some government departments to rural hubs was the direction we need to head towards.
That initiative is pure pork barreling and a back handed way of reducing the size of the public service.
There are reasons why large government departments are based in capitol cities. It's where the people are, It's where the infrastructure is, and it's where the government is.
> lived at home until I saved a deposit
Everyone lives at their home while saving for a deposit.
Some of people's homes are owned by their parents though.
I personally haven't had the luxury of living at home due to work being in a different city to my parents.
They quite rightly don't want to subsidise me. So it's several hundred pissed up the wall in rent a week.
Makes it a lot harder to save up the required 20% deposit.
An asset can be valuable, not every asset is valuable, and it's value can change for the worse. Example, a property in the middle of no where is cheap, but not one will want to rent it or buy it.
Would you like to pay rent, or would you like to pay 1.5x your rent + maintenance + council rates, and then have debt multiples of your annual income, in order to live 1-2 hours commute from work, all while knowing a property crash would wipe out your net worth and ability to move for decades?
Millennials: It's a really tough decision, can I come back to you on that?
Would you like a property manager to instruct you in a condescending way on how best to clean the toxic black mold that forms on your cracked ceiling because the landlord refuses to repair the leaking roof correctly, or would you like to put a nail in a wall without asking permission.
Wasn't a tough decision at all.
> Why would a property crash wipe out your ability to move? Wouldn't that mean that the property you move to would be cheaper too?
Once property is worth less than the mortgage, you can't move unless you have the cash to makeup the difference. You are stuck paying down the mortgage until it is under what you would net selling the home.
It's a big issue during housing bubbles bursting. Anyone who bought within the prior 5 years before the bust is often stuck in their home with mortgages worth more than the home value.
1m dollar Sydney property.
-*Rent*: -25k (2.5% yield, conservative for a house).
-*Own*: -30k interest (3%) -5k maintenance (.5%) -5k rates (.5%), total cost -40k. 5% capital appreciation (average for Sydney) +60k, so net +20k.
-*Rentvest* 200k deposit +15k difference between rent and buy at 7% return, so net +15k
Pretty similar. But in one you live in your own place. I'm not advocating either way, but people have been calling for a crash since 2008, and would have missed out on 5% gains every year since then.
I'm attracted to buy property to live in, but not to invest in. It's a morally questionable investment. If I were to do it, it would be to provide affordable housing. If I had enough buying power to purchase that much, I would want to make sure it is going to those who have less. Millenials have a different view of what a fair and just world looks like.
> I'm attracted to buy property to live in, but not to invest in.
if the gov't gave you a deal where you purchased the property, you kept the deeds until you die then you lose the deeds, would you still buy that property?
> If I had enough buying power to purchase that much, I would want to make sure it is going to those who have less.
how much is a lot? It's easy to say you'd do XYZ if you'd only had the large amount of wealth - but when/if you do end up with that large amount of wealth (likely thru your hardwork), you'd not as easily give up on it for the pure benefit of somebody else.
> Millenials have a different view of what a fair and just world looks like.
i dont think millennial have a different view over any other generations'. People are people, and the human condition hasn't changed all that much since civilization began.
Because it's a shit investment.
The Upsides to investing in property over shares:
The Downsides to investing in property over shares: Low liquidity, high transaction costs, vacancy concerns, active management requirements (or fairly expensive management fees), negative economic externalities of treating housing like an investment (unaffordability for mum and dads, poor building quality as it's profit over quality
If I buy a house I have to pay a shit ton of stamp duty, then lets say the tenenats trash it and move out halfway through. I have to repair the place (the bond doesn't exactly cover the time and energy costs), then try find new tenants. Failing that I have to pay for a real estate agent to then sell the place. Additionally, the yields on rent are quite shite. I do a lot of tax returns with rental schedules and usually they lose money if they have a mortgage, and even if they don't, it's a sub 3% yield after expenses. Negative yielding should be removed. It doesn't exist for actual financial securities such as shares and bonds, so I see no reason why it should exist on the thing people need to live in (IE a huge negative externality)
In contrast, I can buy shares in 2 minutes, for a low ($10-50) brokerage fee, don't need to manage *anything* (we have boards of directors for this), don't need to worry about vacancy rates, nor do I need to worry about the hassle of selling them taking months with an REA. Vanguard management fees are lower than property management fees, when compared against the property value. Also, a highly valued share market doesn't force people out of their homes for unaffordability, so I feel a bit more virtuous at the same time. The dot com bubble was a right shitshow, but seen as less bad than the GFC because the GFC was housing focused, y'know, the thing we *live* in. You don't live in shares.
The only thing Property has going for it is cheap leverage (as it is a secured loan, so is less than half the price of share leverage), which is great when you have a little bit of money and the market is going up, but it cannot sustainably go up at the rate it has - if it does, we'll have property prices hit $5M+ in Sydney by the end of next decade. That just won't happen.
The only people who would buy into property as an investment would be masochists who like spending more work and effort for less, or people who are convinced property has to always go up.
as you said, the problem with shares is that leverage is expensive, so when you are first starting out and you're only saving a 5 figure sum per year what's the point? There's so little movement. I think best way to do it is save a deposit on a modest IP, and then use that as a debt recycling facility for your PPOR, then diversify into shares once you're earning big bucks and leverage isn't so important any more.
The key thing out of all of that is liquidity. Once the feedback mechanisms really kick into gear climate change is going to affect Australia much more negatively and much more rapidly than people assume. There will be a hell of a lot of people bailing out over the next 40 years.
Oh yep. I have no interest in owning property in Australia outside of Tasmania because of climate concerns.
If there is a systemmatic issue, you're in deep shit. Nobody will buy those luxury shorefront condos when they start to go underwater.
I am attracted to property as an investment.
Just not a single residential property in my capital city as it does not provide the diversification of the yield my portfolio desires.
I'm always interested when people say stuff like this what particular industry they're in and the saturation of jobs in that field in cities outside of Sydney and Melbourne.
There's unfortunately a concentration of white collar jobs in Sydney and Melbourne making it difficult for many to find work outside of those two cities.
I think the best thing our government could do would be to decentralise the collar economies away from syd/melb in to cities like Bendigo, Ballarat, Gold Coast, Townsville etc.
Incentivise IT, economic managers, design industries, science, insurance, public service, large accounting firms, consultant firms and more to move headquarters or secondary offices to our non-capital cities.
Just doesn't seem to be any effort in this regards - or not enough to make a notable difference.
Note: I say this as someone who has moved interstate twice and been chasing career advancement. Happy to move, but the careers need decentralising.
I live in a regional centre and median prices here in some suburbs have jumped 300% in 10 years. We haven't even begin decentralising properly yet, and prices are already way out of control, especially for people on regional money (not much at all).
People talk about as if pulling the relief valve on Sydney and Melbourne will solve everything - let me tell you that it does need to happen, but just forcing people out into the regions with no support, jobs or infrastructure is a recipe for disaster. It has to be a considered, ambitious plan from the government - and I don't see that happening unless Scotty from marketing decides to do something other than sit on his hoard of surplus like a dragon, or Albo grows a spine and wins an election
I agree 100%. Part of a solution may be moving where the state department HQs operate from.
Like how a small town exists because of a mine or factory, there needs to be a white collar equivalent to make those jobs just as abundant outside of where they're already abundant. Retail and services follow the wake of the pillars that create towns.
But good luck with any actual policy driven solutions.
Edit: Removed a line that's just argumentative.
I do both. I live 2 hours away from over half of my family and friends. Visiting them may sound inconvenient, but with a full time job and a bit of study my schedule is more accommodating for weekend trips.
I understand why people want to live in a capital city, but to me it's not worth the stress or the financial strain when I can easily just visit.
But not every millenials lives in Sydney, so a lot of us can actually buy a house that's not overvalued.
Yeah it's not like other cities exist! Haha
Up here in QLD property is still considered attainable by people on regular incomes and isn't talked about like some impossible dream.
1 hr commute? There's houses around 450k 30 mins from the CBD, not to mention all the cheap apartments if you want to buy something right in the middle of the city.
Huh? You can buy properties within 5km of CBD in brisbane for less than $400,000.
We bought a new townhouse 9km from CBD for $420,000 4 years ago. It's a 12 min drive.
There are two large advantages to property not being talked about. One - cheap leverage - so you can multiply any gains (or losses for that matter). Two - NG. But NG has been nerfed due to depreciation changes. And leverage only makes sense as long as the fundamental investment is strong, and who can be sure of that now.
I invested in 2 properties when young - I don't regret that, as the leverage was good and the interest rates were never bothersome. But now once I buy my family home, I am looking to make only minimum payments on that mortgage and invest in shares instead. Unless interest rates rise significantly, of course.
When did it become acceptable to generalise whole generations? It doesn’t matter if you’re a boomer gen x gen y or millennial; We all need a place to live.
Why would you be attracted to property when interest rates are at record lows and prices are at record highs? That’s just asking to get financially fucked in the ass.
I’m 33 and very drawn towards property investment as long as it’s something I can add value to or I believe it’s in an undervalued location. Last year I came across numerous run down properties in Melbournes inner west that would have jumped 20% in value after being fixed up and offered over 6% yield.
I agree, Millennials are all about convenience. They wont go out looking at how to optimise returns. They just want to have a direct debit into a EFT fund and ride compounding interest with no effort. And whilst doing so, they enjoy there life and live in the now. Rather than live in the stats/numbers. Who cares if you could have made 1% more on a return? Friends, Family and experiences actually matter more than money I've found in my Mellinal mates. I'm 25M
At the moment, it would be borderline on silly to buy a place in Sydney or Melbourne. Prices don't make much sense anymore and should largely be derived out of how much they can be rented for, less associated expenses. Net yields on houses have been falling and prices skyrocketing, which suggests a big disconnect between fundamentals
Wait, what are you viewing are millennials? Millenials are those born from 1981-1996
The one you are describing seems to be those who follow after. Whatever the case you can't just pin it down to one generation. Its the fact that the culture has changed, we have become a culture of instant gratification as well as a culture of abundance even though people claim they are broke. Because along with abundance we also have a lot of people that lack financial wisdom, add that #YOLO life then you have people who believe they should just spend as much possible on things they can have and enjoy now.
You have people living beyond their means. There are those who could be renting who may want to save up to buy a home, but in the same breath buy their kids expensive gifts like laptops for high school rather than handing them down an old one that could possibly be just a year or two old.
I personally just found about investing in ETF last year and I wish i had known about it when i first started working, but if it wasnt for the internet and youtube where i was able to educate myself about shares where it once seemed intimidating i would have started investing in them.
It all comes down to education/culture and or upbringing
To live in yes, but as an investment not so much. I have both moral / philosophical and financial issues with the latter. ETFs are turning out to be the millennial version of what property was for the Boomers I think.
I think because decent property is out of reach for many millennials (i.e. ok build quality, size and proximity to CBD), there’s a whole bunch who are just calling it quits and looking for other investment options which suit their means and enable them to still rent somewhere closer in which aligns with their preferred lifestyle. That said, for the millennials who can afford it, there is still plenty of heat for desirable properties. Overall I see a potential decrease in demand for McMansions 20km+ from the CBD, as some of those who previously might have been desperate enough for a house to take that route are turning to ETFs and rent as a lifestyle choice.
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Not to sound too sceptical but always consider the reasons why property articles are written and who has an incentive for the market to move in said direction. Property developers have very deep pockets and it wouldn't be unheard-of to pay a PR firm to create buzz around apartment living if it suits their interests.
That's a good point. There may well have been some bias there. But that said, I feel it is true that people are valuing convenience over size more (just based on the people I know IRL) so I think there might be some truth to it.
>ETFs are turning out to be the millennial version of what property was for the Boomers I think. Millennials are jumping on board the gold rush, buoyed by an artificial, government stimulus boosted increase in asset values with scant regard for the fundamentals of the underlying asset class?
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Yeah if you spend a lot of time on this sub you could easily assume everyone invests in ETF's, just like if you spend any time on /r/Australia it sounds like Australia is a third world country where everyone has 50k of hecs from their arts degree and still lives with their parents at 40.
With no savings, who spend 40% of their income on weed.
That was me for a solid few years during uni. Good times. No ragrets.
And does anyone else hate being on hold with Centrelink??? Oh and Australia Post is the worst am I right guys?
Oh God the centrelink one. I've dealt with them, while they are annoying, its not really that bad.
I've had two or three fortnights of being paid by centrelink. It's sometimes annoying, sometimes ridiculous and that's not including robodebts. On the other hand I'm sure there are people who complain about being expected to try to find work.
It's not the waiting on hold, it's the fact the line is always busy.
Now we're buying ETFs AND weed.
Lol spot on.
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Top kek
On this sub the average person is a 17-year-old high schooler with 25k in savings who plans to be financially free by 21.
I wish I only had 50k of HECS.
I bet they have superannuation
Millenials are definately not jumping on the ETF bandwagon. 99% of people that I know at work and uni live paycheck to paycheck and are caught up in so much consumerism that I doubt they have any savings to invest. source: I'm a millenial
Artificial government stimulus: record low interest rates and QE in majority of the world - I would call that one a yes. Scant regard for the fundamentals: again in a lot of cases I would say yes. Ask your average ETF buyer how to value one of the companies on the index funds they buy and I bet you’ll get a blank stare. Not that I’m criticising it, I do the same but you gotta admit the similarities.
> Ask your average ETF buyer how to value one of the companies on the index funds they buy and I bet you’ll get a blank stare. I invest in ETFs because I don't know how to value companies and I'm not interested in learning.
yes, i agree. Learning valuations isn't easy (see a lecture on valuations here https://www.youtube.com/watch?v=32oabRFnplQ - it's quite interesting, but this is but just the beginnings). ETFs allows people who don't have the time nor energy to invest, and obtain average results (market results) for as low a fee as possible. And somehow, it also beats most actively managed funds after fees.
Is there seriously any downside to regular folk using this as their primary investment vehicle? I’m 20, should I just be dumping my savings into ETFs?
Alan Kohler argued one of the problems is that you're essentially investing in companies just because they're large, which therefore makes them larger, and the cycle goes on. Personally, I invest in LICs because they make an active decision about what they invest in.
Is that any different to mutual funds though? Which I assume are at least as popular as ETFs.
The difference between a LIC and a mutual fund is that LICs are listed on the ASX, whereas mutual funds you need to invest directly into the fund itself.
so as a disclaimer, i m not a fiduciary financial advisor, and take no responsibility for any actions you take. I m merely describing what I'm doing, and why. ETFs in the past 10-15 yrs have been more and more popular, because of their simplicity and ease of trading, as well as diversity. Not all ETFs are the same, and there are some that are riskier (since they concentrate their stocks in a particular market segment or industry). But realistically, you can't go wrong with the vanguard broad spectrum ETFs like VTS or VAS (for australia only shares). But even better imho, is their diversified fund of funds: e.g., VDHG. See [this page](https://tool.vanguardinvestments.com.au/mstar/au/fundcompare.htm?site_code=adv##target=fct&selectedFund0=F00000ZS2F&selectedFund1=F00000ZS2H&selectedFund2=F00000ZS2I) for the diversified fund of a fund. These fund of funds (meaning, it is a fund composed of other vanguard funds) contain a good mix of everything, in a "correct" ratio for a particular risk level - high growth is higher risk, balanced is obviously balanced (it's lowest risk of the three i linked), and the diversified (not high growth) is middle ground risk. The risk is related to how much of the money is in stocks vs how much is in bonds (a fairly "safe" asset, compared to stocks, but growth is low). As a young'un, you have lots of time, and so even if the market crashed right after you purchased, you'd still have time to recover, so a more risky mix _ought_ to fit your time-frame (i'm assuming you don't need the funds invested for some 10-20 years). I have listed ETFs - which you buy (and sell) using your stock broker. If you're going to want to constantly drip some money in, the stock brokerage cost can add up. Plus it's hard to automate this - you'd have to manually login online every month to do it. Vanguard has the equivalent funds not as an ETF that's traded, but as a [mutual fund](https://tool.vanguardinvestments.com.au/mstar/au/fundcompare.htm?site_code=adv##target=fct&selectedFund0=F0AUS05C62&selectedFund1=F0AUS05GX8&selectedFund2=F0AUS05GX9) (like your super fund) that you can setup an automatic Bpay payment to invest into. This allows you to automate the investing process, just like paying bills. It's slightly more expensive, but you don't pay each time you buy into the fund (unlike ETF, which you pay a brokerage fee). also, don't dump everything in - keep some emergency amount for, well, emergencies. Then, in 10 year's time, re-evaluate how much risk you're willing to take (eg, you may need a deposit for house etc).
I currently have about a third of my cash savings sitting in a mutual fund simply because it's zero fee up to $5000. That I do drip money into every other week or so. My understanding is that in the vast majority of cases, fund managers can't consistently beat the market. So I'm not really seeing any downsides to using ETFs over a mutual fund, with the exception of not being able to pay into it as often. So I'm really just better off saving up a lump sum to invest, then picking some ETFs I like?
> picking some ETFs I like? as long as those ETFs are diversified ETFs. Don't buy random, or industry specific ETFs like https://au.finance.yahoo.com/quote/AMLP?p=AMLP or low diversity ETFs. For the vanguard ETFs have an equivalent mutual fund version that is _exactly_ the same investment. Use those instead of the ETF for small drips should save you on transaction fees (which is significant at low investment amounts). However, the vanguard mutual funds have a _slightly_ higher fees vs their equivalent ETF (unless you can switch over to the wholesale version of the mutual fund).
That’s interesting, given me something to mull over. Thanks a lot
>I currently have about a third of my cash savings sitting in a mutual fund simply because it's zero fee up to $5000. Is this Spaceship? Or something else?
Yep, Spaceship.
I started learning fundamental analysis, its kind of daunting for someone without any financial business background and I actually managed to pick a banger of a stock a few years back which grew from 500 to 3000 in 3 years, but Im scared that that was just beginners luck and if I were to pick any more they will fail miserably, and I dont particularly want to keep up to date or learn any more about fundamental analysis so Ill just stick with ETFs.
It's almost certainly luck. There's plenty of examples that suggest that there is almost no such thing as a portfolio investor that isn't lucky [this](https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.2010.01598.x) suggests that there are very few investors that beat the index and those that do are too high fees. While [this](https://onlinelibrary.wiley.com/doi/full/10.1111/j.1540-6261.1997.tb03808.x) finds that "The results do not support the existence of skilled or informed mutual fund portfolio managers". Granted those pertain to the US stock market specifically. Basically even the people who spend 60 hours a week at this stuff and are the top of their game can't beat the index over a statistically significant amount of time. Picking stocks is still fun it's like gambling with better odds so don't let me stop you.
Thats why I only put in 500 on the stock pick. I treated it as a gamble.
I'm not actually convinced 'fundamental analysis' is anything more than well-informed gut instinct.
Better than technical analysis.
Hey thats exactly how I invest. Trump makes some claim. US stocks drop. I put some play money towards whatever Vanguard V_S acronym covers Murica. Repeat a few more times through 2019. Really should look more into it though.
> Scant regard for the fundamentals: again in a lot of cases I would say yes. Ask your average ETF buyer how to value one of the companies on the index funds they buy and I bet you’ll get a blank stare. I don't think that is a requirement, heck that is the point of ETFs: diversification with minimal expertise. And in addition also the point of markets: no one knows how to value resources so let the invisible hand of the market guide the price to a fair value.
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Definitely hugely positive. Many of my boomer and older Aunts are drastically fearful of shares because I think they got scammed into buying something stupid at high prices a few decades ago. I think that simple ETF indexing would have changed everything and they would be 5-10x wealthier and have zero concerns about money.
Didn’t say it was and I agree with you. I was simply responding to the other poster and my only point was that people buying for the most part aren’t doing it because they have some grand view on the fundamentals and the ETF aligns with their strategy, other than maybe: in the long term the market moves up.
Most professionals struggle to value companies anyway - there is a huge amount of guesswork involved. Most millenials at my work dont have clue about ETFs and think that shares are 'risky'
Thats what I get the most, "Aren't shares risky?"
One of my co-workers at a previous job (fairly young, mid-20s) mentioned in passing that she was thinking of investing, so naturally I was intrigued and asked her what her plans were. She said she wanted to slowly invest small amounts somehow (like $50 amounts) so I pointed her in the direction of microinvesting apps like Raiz and Spaceship and Pocket so she could check them out herself, since she hadn't heard of them before (also stressing that I wasn't offering financial advice or specific recs etc but just giving her some links to check out and that she should always do her own research). About a month after that conversation, she came back to me and said she put in some money for about two weeks, and it went up 1c, and then dropped 1c, so she didn't make any money overall, and she pulled everything out of the account. :X Another co-worker, late-20s, was shocked when I said I'm leaving my investments to compound for 2-3 decades. "But you'll be old before you can get the money!" Maybe another issue is that there is a tendency to want to see great returns, in a short amount of time? But to be fair, at my former workplace, the base payrate was a couple of dollars up from minimum pay, and many people who worked there were either doing multiple jobs to earn enough money, or living from paycheck to paycheck so that could explain their impatience of wanting to see money/results fast from investments.
That’s all the response I get when I tell people to put more money into super. “Oh I did salary sacrifice $50 but my super balance didn’t change so I stopped it” Compounding interest (positive or negative) just isn’t for everyone to understand.
I think most people can understand it, but if you’re living pay to pay the value of having that $50 a week in the pocket is too high vs some nebulous future self having more money.
Every time I look up 'How to do value investing', it just seems like a whole lot of smoke and mirrors, and people just make a gut decision anyway. There doesn't appear to be a formula into which you can plug all the company's numbers, and then get outputted a 'true share value'.....and if there was and everyone used it, I don't know what what happen with the share market.
Very true, real estate does not work as well as it used to.
Exactly. It used to go down in price or remain flattish many many years ago. Now it doubles every 7 years forever. FOREVER!!!
But ... what about a property ETF? :P
Millennials not attracted to property... at the current prices.
Attracted to property, just can not afford...
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This is going to be a big issue in a few decades.
This is going to be a MASSIVE issue a few decades after that. They've created a huge generation of renters due to shit policy.
It’s an issue now
Also life expectancy will keep rising. Basically a slow miserable existence for lots of people. Complacency really is a killer.
Are people really living longer into their 90s/100s or are fewer people dying young? I always thought that life expectancy increases was mostly down to the latter
those two things are not mutually exclusive and they're both happening.
You need to put your name down for a government funded spot in an aged care facility early, before you need it.
Aged care facilities seem to be getting worse, at least not better. Retirement villages are where it's at.
They are 2 different things really but yeah retirement villages are nice. Aged care is often once you can't take care of yourself and home care is inadequate. That being said there are some 5 star places which are like hotels and have very limited government funded spots.
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Agreed. It’s like finding the best of a bad bunch. Have you had a look at the Arcare chain if they are in your area.
When I calculated it once, using some rough estimates (and things can swing either way depending on the details), renting can be on par with a mortgage if you invest the money you save by renting through your life. The advantage with a mortgage though is it's kind of like a forced saving plan. Harder to be disciplined when you don't have to be. And so I would guess that many who rent are also not saving, and therefore can barely afford rent when they're retired, which is going to be very hard. The other thing about renting is that you might rent a place that's nicer than the place you would be willing to live in if you were buying, and that reduces (or eliminates) any excess income you might keep over having a mortgage.
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For sure. There are lots of factors that can impact either way. It might be that if property prices stagnate, more of them become positively geared, which could mean less to be saved renting vs mortgage (correct me if I'm wrong). Things like interest rates, rental prices, stock growth rates, inflation, etc, all factor into this and make it hard to predict, so I just picked some values that seemed reasonable and representative of the current state of affairs.
I think the problem you're describe is what superannuation is for. Even someone on a modest income for their entire life in a poorly performing super fund should have enough in their super to at least cover the rent for their retirement.
Likely they had minimal super throughout life due to it not being mandatory for workers for a large portion of their life, and still not mandatory for business owners, unless they pay themselves a salary. Selling the business was likely their retirement plan, but it went bust.
I have sympathy but they made their own bed.
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By being born too early for compulsory super or for trying to grow their incomes and the country by being entrepreneurs, even if not successful? You don't sound sympathetic.
Hindsight is 20/20, but it is kinda obvious you shouldn't put all your eggs in one basket.
This is not a renting vs owning problem, it's an investment/income stream problem. People seem to forget that being on the pension and owning your own home has an opportunity cost on the cash/equity in the home. That money could be in a business or shares, bonds, term deposit and be just as well off and stable if not more so than the home ownership option
although as you get older, the thought of having to move when the landlord kicks you out for whatever reason is hard. It's workable when you're young and can move quickly. But as an old pensioner, not so much. Owning your own home gives you the security you'd want imho. Tho they pay a price for it.
Although owning your home with a pension is worth a lot. Non home owners (couples) can only have $210k more than homeowners in assets before they start losing the pension. So that additional $210k needs to produce enough income to cover rent (over the cost of owning the home) in order for the couple to be as well off *however* the income test for the pension cuts in at $7800 per year So if your rent is greater than $7800, then unless your additional income is greater than your pension loss, you are much better off as a homeowner on the pension. If you aren’t on the pension and your choice not to own a PPOR resulted in a post tax increase in income greater than the cost of rent - then financially you are better off (Not all decisions are financial)
When I talk with people, this does often get forgotten. Some talk about how much cheaper it is to own now they've paid off or nearly paid off their home. They don't seem to remember that if they sold their house and rented, the income they could produce from the money from the sale of their home would offset their rent costs.
That's why you rent until 60, pull a lump sum out of super to buy your home to die in.
Probably because we can’t fucking afford it
"**not attracted to**" lol yeah that's the problem /s
Not at those prices
These are not the greater fools the Boomers were looking for.
Too fucking right.
I want to @#$%ing scream at headlines like this I'm a decade+ older than them and I still know exactly what they're thinking The correct god damn headline is "Due to atrocious government policy, protecting investors, local and foreign, Millennials can not *afford* property"
Second this.
It's very simple troll, to get a rise out of us. It has worked. Well done to these assholes.
Yeah this is like saying the volunteers want to be fighting fires. It's not a problem if everyone's just doing what they want.
let me fix that title for you: Millennials not ~~attracted to~~ *able to afford any* property
Are you reading the content? Cannot afford it is the rational. The conclusion is that the millennials are going elsewhere. So the title is just fine. The key is to define how many millennials ... some, many, most? If 30% plus then that must be significant and have impact on property in the longer run
Came here to say the same thing ! 😂
My 30 yo brother bought a property with no parental support by working at KFC at 16, and Woollies at around 20 through uni and being a tightass. Somehow his wife did the same (before they were married).
Well that depends on where he's living.
Obviously isn't stupid and are not living in Sydney CBD.
Buying a property and affording a property are very different things. I know someone who between him and his parter earn around $140000 p/y but they have a mortgage of close to 1.5 mil. They bought a house but there is no way they can afford it
>They bought a house but there is no way they can afford it Did they *say* that money's tight or are you assuming this? Because I certainly don't give out my full financial position to mates in casual conversation.
Considering that banks only lend 5x income and have been doing so for years, perhaps you need to recheck your figures.
There are plenty of mortgage brokers around that are happy to fudge the figures for that kind of trail Commission.
Did he live at home all that time? Or did he rent?
Lived at home while studying, after he graduated he moved to a rural town for a job for a few years house sharing.
While that makes it a little less impressive to me it's still very cool that he owns a house. Goals!
Where and how long ago?
South east melbourne ~40m drive from CBD. I know my brothers one was about 3 years ago, no idea about his wife, I think it was +/- a year.
I bought one at 27 for 500-600k. I lived at home until I saved a deposit. Can be done.
Can be done if you parents are alive / local / able to subsidize your living expenses while you save a deposit.
I don't understand this millennial narrative. I bought one for 450K at 28 after my partner halved her income and we left home at 19. I am at 40% equity after 5 years with no investments or fancy techniques. My peer group is similar to me. (No we aren't super high earners, bought at around 100K household income in a capital city, 20min drive from CBD)
It's mainly people who live in Sydney who think the whole country is expensive. I bought at 21 in a regional town and that wasn't even anything extraordinary as prices weren't crazy where I grew up, most of my mates bought at similar ages like 21-26.
I think the biggest failure of successive governments has been no planning to decentralise our white collar jobs to 'rural hubs'. There's some fantastic towns throughout Australia that _deserve_ a larger white collar economy - but there's little incentive to bring a work force out there (in fact, they're usually paid less as the cost of living is reduced) I'm not an LNP fan for several reasons - but the recent move to attempt moving some government departments to rural hubs was the direction we need to head towards.
The harsh truth of it is that while there are some very liveable and lovely regional towns out there, businesses don't want to move there. Businesses usually don't even want to move outside of the central area within a city, let alone to a place hours away. We can spend the huge amounts of money required to subsidise and prop up areas to make them more attractive but it's really not a great return on investment from a government perspective. Governments have moved departments to regional hubs before and they've moved quite a lot of them back to cities because the market forces just aren't there. You don't have good access to labour, people don't particularly want to move there even with the cheaper cost of living, you aren't connected with any of the other industries or agencies, you are disconnected of what is happening in a market, you have minimal supporting infrastructure ect ect. That's not to say we shouldn't support growth in our regional centres, we should, but they're a long, long way off providing genuine alternatives to capital cities and the money required to prop them up makes it unfeasible. Big economic hubs don't happen by accident, it's where businesses succeed and want to be. If the problem is that housing is too expensive we have a lot of policy tools available to put downward pressure on houses without spending tens of billions in infrastructure to prop up unattractive regional centres. But we don't do that because the government doesn't really want to put downward pressure on prices.
I mostly agree - but there's plenty of feasible cities like Newcastle, Wollongong, Geelong Gold Coast that have a lot of the size and features needed to live comfortably, proximity to a capital city - but absolutely no jobs in white collar industries. Bizarre and a waste.
It's a whole lot easier to build better transport links between those satelite cities and their city anchors so people can comfortably commute than it is to try and force professional jobs to move up there.
> I'm not an LNP fan for several reasons - but the recent move to attempt moving some government departments to rural hubs was the direction we need to head towards. That initiative is pure pork barreling and a back handed way of reducing the size of the public service. There are reasons why large government departments are based in capitol cities. It's where the people are, It's where the infrastructure is, and it's where the government is.
There are two of you right?
> lived at home until I saved a deposit Everyone lives at their home while saving for a deposit. Some of people's homes are owned by their parents though. I personally haven't had the luxury of living at home due to work being in a different city to my parents. They quite rightly don't want to subsidise me. So it's several hundred pissed up the wall in rent a week. Makes it a lot harder to save up the required 20% deposit.
Any asset is valuable, at the right price.
An asset can be valuable, not every asset is valuable, and it's value can change for the worse. Example, a property in the middle of no where is cheap, but not one will want to rent it or buy it.
Until a mine opens nearby
Knowing my luck, the mine would swallow the house, and my insurance wouldn't cover mines swallowing up houses.
Heh
Would you like to pay rent, or would you like to pay 1.5x your rent + maintenance + council rates, and then have debt multiples of your annual income, in order to live 1-2 hours commute from work, all while knowing a property crash would wipe out your net worth and ability to move for decades? Millennials: It's a really tough decision, can I come back to you on that?
Would you like a property manager to instruct you in a condescending way on how best to clean the toxic black mold that forms on your cracked ceiling because the landlord refuses to repair the leaking roof correctly, or would you like to put a nail in a wall without asking permission. Wasn't a tough decision at all.
Now you gotta pay to clean the black mold yourself.
Why would a property crash wipe out your ability to move? Wouldn't that mean that the property you move to would be cheaper too?
> Why would a property crash wipe out your ability to move? Wouldn't that mean that the property you move to would be cheaper too? Once property is worth less than the mortgage, you can't move unless you have the cash to makeup the difference. You are stuck paying down the mortgage until it is under what you would net selling the home. It's a big issue during housing bubbles bursting. Anyone who bought within the prior 5 years before the bust is often stuck in their home with mortgages worth more than the home value.
If you’re in negative equity because property prices have collapsed you have $0. You cannot move house In fact you have -$ALOT
Trying to buy a house in the greater Sydney region atm and this isn't even an exaggeration.
1m dollar Sydney property. -*Rent*: -25k (2.5% yield, conservative for a house). -*Own*: -30k interest (3%) -5k maintenance (.5%) -5k rates (.5%), total cost -40k. 5% capital appreciation (average for Sydney) +60k, so net +20k. -*Rentvest* 200k deposit +15k difference between rent and buy at 7% return, so net +15k Pretty similar. But in one you live in your own place. I'm not advocating either way, but people have been calling for a crash since 2008, and would have missed out on 5% gains every year since then.
You do realise that the property is eventually paid off..
I'm attracted to buy property to live in, but not to invest in. It's a morally questionable investment. If I were to do it, it would be to provide affordable housing. If I had enough buying power to purchase that much, I would want to make sure it is going to those who have less. Millenials have a different view of what a fair and just world looks like.
> I'm attracted to buy property to live in, but not to invest in. if the gov't gave you a deal where you purchased the property, you kept the deeds until you die then you lose the deeds, would you still buy that property? > If I had enough buying power to purchase that much, I would want to make sure it is going to those who have less. how much is a lot? It's easy to say you'd do XYZ if you'd only had the large amount of wealth - but when/if you do end up with that large amount of wealth (likely thru your hardwork), you'd not as easily give up on it for the pure benefit of somebody else. > Millenials have a different view of what a fair and just world looks like. i dont think millennial have a different view over any other generations'. People are people, and the human condition hasn't changed all that much since civilization began.
Because it's a shit investment. The Upsides to investing in property over shares: The Downsides to investing in property over shares: Low liquidity, high transaction costs, vacancy concerns, active management requirements (or fairly expensive management fees), negative economic externalities of treating housing like an investment (unaffordability for mum and dads, poor building quality as it's profit over quality If I buy a house I have to pay a shit ton of stamp duty, then lets say the tenenats trash it and move out halfway through. I have to repair the place (the bond doesn't exactly cover the time and energy costs), then try find new tenants. Failing that I have to pay for a real estate agent to then sell the place. Additionally, the yields on rent are quite shite. I do a lot of tax returns with rental schedules and usually they lose money if they have a mortgage, and even if they don't, it's a sub 3% yield after expenses. Negative yielding should be removed. It doesn't exist for actual financial securities such as shares and bonds, so I see no reason why it should exist on the thing people need to live in (IE a huge negative externality) In contrast, I can buy shares in 2 minutes, for a low ($10-50) brokerage fee, don't need to manage *anything* (we have boards of directors for this), don't need to worry about vacancy rates, nor do I need to worry about the hassle of selling them taking months with an REA. Vanguard management fees are lower than property management fees, when compared against the property value. Also, a highly valued share market doesn't force people out of their homes for unaffordability, so I feel a bit more virtuous at the same time. The dot com bubble was a right shitshow, but seen as less bad than the GFC because the GFC was housing focused, y'know, the thing we *live* in. You don't live in shares. The only thing Property has going for it is cheap leverage (as it is a secured loan, so is less than half the price of share leverage), which is great when you have a little bit of money and the market is going up, but it cannot sustainably go up at the rate it has - if it does, we'll have property prices hit $5M+ in Sydney by the end of next decade. That just won't happen. The only people who would buy into property as an investment would be masochists who like spending more work and effort for less, or people who are convinced property has to always go up.
as you said, the problem with shares is that leverage is expensive, so when you are first starting out and you're only saving a 5 figure sum per year what's the point? There's so little movement. I think best way to do it is save a deposit on a modest IP, and then use that as a debt recycling facility for your PPOR, then diversify into shares once you're earning big bucks and leverage isn't so important any more.
Yeah people ignore the leverage for some reason. If you get in and out you can make profits way faster than building through shares.
The key thing out of all of that is liquidity. Once the feedback mechanisms really kick into gear climate change is going to affect Australia much more negatively and much more rapidly than people assume. There will be a hell of a lot of people bailing out over the next 40 years.
Oh yep. I have no interest in owning property in Australia outside of Tasmania because of climate concerns. If there is a systemmatic issue, you're in deep shit. Nobody will buy those luxury shorefront condos when they start to go underwater.
Goddamn millennials? Who will perpetuate the cycle?
Damn, there are not getting scared of missing out anymore
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Ah heck, never thought I'd envy the French Goverment but here I am. omelette du fromage?
Because they’re generally priced out****
I am attracted to property as an investment. Just not a single residential property in my capital city as it does not provide the diversification of the yield my portfolio desires.
It’s a rip off. Not worth it.
Even if they were, who is going to give them the money? Banks know they are over exposed.
Very undervalued point
The millenials referenced wouldn't happen to only live in Sydney and to a lesser extent Melbourne would they?
i think you can leave Melbourne out on that too. Melbourne still has 700k options inner city or suburban.
That's actually decent.
I'm always interested when people say stuff like this what particular industry they're in and the saturation of jobs in that field in cities outside of Sydney and Melbourne. There's unfortunately a concentration of white collar jobs in Sydney and Melbourne making it difficult for many to find work outside of those two cities. I think the best thing our government could do would be to decentralise the collar economies away from syd/melb in to cities like Bendigo, Ballarat, Gold Coast, Townsville etc. Incentivise IT, economic managers, design industries, science, insurance, public service, large accounting firms, consultant firms and more to move headquarters or secondary offices to our non-capital cities. Just doesn't seem to be any effort in this regards - or not enough to make a notable difference. Note: I say this as someone who has moved interstate twice and been chasing career advancement. Happy to move, but the careers need decentralising.
I live in a regional centre and median prices here in some suburbs have jumped 300% in 10 years. We haven't even begin decentralising properly yet, and prices are already way out of control, especially for people on regional money (not much at all). People talk about as if pulling the relief valve on Sydney and Melbourne will solve everything - let me tell you that it does need to happen, but just forcing people out into the regions with no support, jobs or infrastructure is a recipe for disaster. It has to be a considered, ambitious plan from the government - and I don't see that happening unless Scotty from marketing decides to do something other than sit on his hoard of surplus like a dragon, or Albo grows a spine and wins an election
What regional centre? Geelong?
Newcastle
I agree 100%. Part of a solution may be moving where the state department HQs operate from. Like how a small town exists because of a mine or factory, there needs to be a white collar equivalent to make those jobs just as abundant outside of where they're already abundant. Retail and services follow the wake of the pillars that create towns. But good luck with any actual policy driven solutions. Edit: Removed a line that's just argumentative.
Do you not want to live near your friends and family?
I do both. I live 2 hours away from over half of my family and friends. Visiting them may sound inconvenient, but with a full time job and a bit of study my schedule is more accommodating for weekend trips. I understand why people want to live in a capital city, but to me it's not worth the stress or the financial strain when I can easily just visit. But not every millenials lives in Sydney, so a lot of us can actually buy a house that's not overvalued.
Yeah it's not like other cities exist! Haha Up here in QLD property is still considered attainable by people on regular incomes and isn't talked about like some impossible dream.
I don’t want to live in a place with mid 40s in the summer with temperatures only set to increase.
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1 hr commute? There's houses around 450k 30 mins from the CBD, not to mention all the cheap apartments if you want to buy something right in the middle of the city.
People are obsessed with driving and refuse to pay tolls. Im sure that will change but still feels like a small city mentality.
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In literally every direction from the city.
Did you even look?
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Yeah it's not northside. I live Arana Hills - a 3bdrm old style house is 500k+
Huh? You can buy properties within 5km of CBD in brisbane for less than $400,000. We bought a new townhouse 9km from CBD for $420,000 4 years ago. It's a 12 min drive.
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Poor location? I live near a highway by choice. No, property value has not risen much at all in Brisbane.
There are two large advantages to property not being talked about. One - cheap leverage - so you can multiply any gains (or losses for that matter). Two - NG. But NG has been nerfed due to depreciation changes. And leverage only makes sense as long as the fundamental investment is strong, and who can be sure of that now. I invested in 2 properties when young - I don't regret that, as the leverage was good and the interest rates were never bothersome. But now once I buy my family home, I am looking to make only minimum payments on that mortgage and invest in shares instead. Unless interest rates rise significantly, of course.
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That's about it. I'd just add that you points reveal the government's property taxes and exemptions as socialism for the wealthy.
That headline would change overnight if only property was affordable.
When did it become acceptable to generalise whole generations? It doesn’t matter if you’re a boomer gen x gen y or millennial; We all need a place to live.
Because we can’t fucking afford it.
Why would you be attracted to property when interest rates are at record lows and prices are at record highs? That’s just asking to get financially fucked in the ass.
I’m 33 and very drawn towards property investment as long as it’s something I can add value to or I believe it’s in an undervalued location. Last year I came across numerous run down properties in Melbournes inner west that would have jumped 20% in value after being fixed up and offered over 6% yield.
And yet they say "Fuck property." Which is it?
I agree, Millennials are all about convenience. They wont go out looking at how to optimise returns. They just want to have a direct debit into a EFT fund and ride compounding interest with no effort. And whilst doing so, they enjoy there life and live in the now. Rather than live in the stats/numbers. Who cares if you could have made 1% more on a return? Friends, Family and experiences actually matter more than money I've found in my Mellinal mates. I'm 25M
At the moment, it would be borderline on silly to buy a place in Sydney or Melbourne. Prices don't make much sense anymore and should largely be derived out of how much they can be rented for, less associated expenses. Net yields on houses have been falling and prices skyrocketing, which suggests a big disconnect between fundamentals
Millennials can't afford property
" not attracted" or cant afford?
Wait, what are you viewing are millennials? Millenials are those born from 1981-1996 The one you are describing seems to be those who follow after. Whatever the case you can't just pin it down to one generation. Its the fact that the culture has changed, we have become a culture of instant gratification as well as a culture of abundance even though people claim they are broke. Because along with abundance we also have a lot of people that lack financial wisdom, add that #YOLO life then you have people who believe they should just spend as much possible on things they can have and enjoy now. You have people living beyond their means. There are those who could be renting who may want to save up to buy a home, but in the same breath buy their kids expensive gifts like laptops for high school rather than handing them down an old one that could possibly be just a year or two old. I personally just found about investing in ETF last year and I wish i had known about it when i first started working, but if it wasnt for the internet and youtube where i was able to educate myself about shares where it once seemed intimidating i would have started investing in them. It all comes down to education/culture and or upbringing