Housing prices, Australia: Living with parents for five years will see you save $138,000 deposit
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How long will you have to live with your parents to be able to afford a housing deposit as young Australians increasingly lose hope of ever having a foot on the property ladder.
- More than two thirds of Australians believe they will never own a property
- But living at home for five years can save you $138,000
Young Australians desperate to climb the housing ladder are giving up hope of owning a home of their own, but new data has revealed that there’s a surefire trick to saving for a deposit: move back in with your parents.
A new survey found that more than two-thirds (72 per cent) of Australians between the ages of 18 and 34 believe they will never be able to buy their own home.
But Australians willing to move back in with their parents for five years can save a whopping $138,000, which is more than enough for a reasonably sized house or apartment.
TO Solve Strategic The survey found that younger Australians have an incredibly bleak outlook on home ownership after the Reserve Bank raised interest rates nine times from May 2022 to the current level of 3.35 per cent.
Research by comparison site Finder found that the average cost of living away from home and renting adds up to $24,927 a year and could set your finances back by up to 10 years.
Money seekers expert Sarah Megginson said living at home can be a big help for young people trying to climb the property ladder, especially with inflation reached a rate of 7.8 percent in the December quarter.
Comparison site Finder said it’s possible to save $138,000 for a deposit over five years by living at home. In the image, a young woman having dinner with her parents.
A whopping 72 per cent of Australians aged 18-34 believe they will never be able to buy a home. In the photo, a for sale sign in Canberra.
“Staying home for a few more years without paying rent and taking advantage of compound interest can add tens of thousands of dollars to a person’s savings,” he said.
‘Often, people move home to save, but maintain bad spending habits, so they don’t end up ahead financially.
‘Having a set budget and minimizing spending is the key to maximizing your savings.’
Someone who rents spends about $15,000 a year on rent, nearly $10,000 on bills and groceries (including alcohol), and $163 on home maintenance items, an average of $24,927 a year.
Most will also spend an extra $950 on unique items like furniture, appliances, and cookware on top of that.
The average young Australian (millennial and Gen Z) has $17,917 in savings and puts away around $872 per month, according to Finder.
Ms. Megginson recognized that despite difficult economic times and ever-rising prices, it was not always possible to live with parents.
For renters looking to buy their own place, he suggested creating a budget strategy.
“Set a time frame to buy a home, then figure out how much you need to save each month to reach your goal,” he said.
For renters looking to buy their own place, creating a budget strategy is a good starting point. In the photo, young tenants in a shared house.
The average cost of living away from home is $24,927 a year (pictured) and could set your finances back up to 10 years
‘Consider moving to a cheaper suburb or downsizing to a smaller place. Even a small difference in your weekly rent could save you thousands of dollars a year.’
Ms. Megginson advised that people also look to cut back on unnecessary expenses, such as expensive gym memberships and eating out a lot.
She said the only upside to all the rate hikes since last May is that banks are now offering higher interest on savings.
That means “great value can be had in a good savings account: any money you can save can make more money for you in the right savings account.”