Recently, I've sensed a bit of sympathy directed my way. Over thirty, still share-housing, what a hapless looser!
On our eighteenth birthdays we're legit, twenty-one's the sentimental milestone, yet the real Australian rite of passage in to adulthood proper seems to be signing on that dotted line for your first mortgage.
The presumption seems to be that only after you're massively indebted to a lending institution are you then sufficiently burdened to call yourself a grown up.
As I don't own my own place yet and aren't planning to any time soon, the implication follows that I am demonstrating an immature lack of regard for my own future.
Listening to my old school chums discuss interest rates and bathroom renovations my eyes glaze over as I smile and nod. The collective obsession of the First Home Buyer Fanatics is a deeply ingrained cultural value and it's quite un-Australian of me not to jump on board.
Please don't think I'm anti home ownership; I merely want to question the popular timeline. It feels somehow more sporting that I should try to make my fortune first, before basking in the spoils. .
Secretly, I would love to build my own dream home one day. It's a pretty well-rounded fantasy actually. There's even a special scrapbook stashed under my bed which contains floor plan sketches and magazine clippings.
I'm prepared to wait though, because I'm simply not convinced that borrowing heavily so I can have what I want sooner is a wise choice.
My friends are committing themselves to loans which will cost them ridiculous amounts in interest so they can "own their own home sooner".
It's a mortgage - that means the bank owns it, not you.
Sure, it's better than renting. You can paint it purple if you fancy, and drill as many hooks in to the wall as you desire. You can even borrow more money and dig in a pool. I wonder though, exactly how much are such small luxuries worth?
It's generally accepted that you shouldn't buy a new dress on credit if you really can't afford it, so why do we throw such sound logic out when there are a few more zeroes on the end of the price tag and the question is a whole lot more important?
I know, I know - it's different - it's an investment. But you know what? It's still only a matter of speculation that it will be a good investment. Now, more than ever, we need to question whether "safe as houses mate" is such a dependable mindset.
Our compulsive home-owning habits at least partly stem from a desire for the trappings of success; creating a lifestyle which is a picture perfect image. But looking the part doesn't create anything.
Australia's property obsession has meant that as a society we have a lot of our eggs in one basket. So it is near impossible for us to be a nation of innovators and entrepreneurs; we're just too restricted by our mortgage repayments.
Perhaps if young investors spent more time thinking about the eventual cost of their mortgage they would be, well, firstly horrified, then secondly less intimidated by the risks associated with alternative forms of investment.
Apart from the building and renovation stages housing, literally, just sits there. If we seriously want to stimulate the economy then we need to be a little braver and diversify how we invest.
Yet, most first home buyers never even pause and consider using their deposit as start up capital for another type of investment which could earn them a lot more a lot sooner.
Indulge me as I generalize wildly for a moment. To get started in property you need around $50 0000. But you can set yourself up in lots of commercial enterprises with less than $5000. What you need to invest instead is your time and energy; which, at the end of the day, when you are locked in to working to pay the mortgage is what you're really giving away anyhow.
Obviously few people seriously consider the alternatives because they pose a much higher degree of risk.
I am a living proof of the flaw in my own theory. I was saving for a house deposit when I decided to use the money to start a wholesale business which, ultimately, failed and I lost the lot.
As it happens, if I had been sensible ten years ago and bought property instead I would certainly be in a much better financial position now.
But you know what? At the end of the day, it was only money, (lucky this is in print, so you can't hear me choking on my own words). Seriously though, I trust that I will have other days in the sun.
The way I figure it, I've got at least another 35yrs before retirement, and that should be enough time to work out how to put a roof over my head in older age.
Having nothing to show for six years hard work was pretty depressing. But, it left me free to go back to university as a mature age student. I doubt I would have had the confidence to take the plunge and switch careers if I was still working for someone else and servicing a mortgage.
In another ten years I'll know for sure if I should have been buying up right now. I can only hope that if the day comes when I don't own and can't afford to rent, that whilst I was smiling and nodding one of my mates was discussing their plans to add a guest room on out the back of their place.
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Comments
don't be so hard on yourself - you did the right thing
In the last couple of weeks I've had the pleasure of speaking with a number of successful young entreprenuers who like the blogger here - had the money to invest either in a start up business or in a hourse - like the blogger here, they chose to create a company - to create some intellecutal property and to create a mechanism through which they would be able to create more investment and employment opportunities for other young Australians.
When businesses go right they are fantastic ways to generate capital, ideas and opportunities. But I also like to suggest that they are also a tremendous source on learning when they don't go right. Having interviewed a number of angel investors recently I've also discovered they are more likely to invest in someone who's had a company go bad - because failed entreprenuers are more likely to see the warning signs, and more likely to know how to avoid them in future. While this first business venture might not have gone off as you'd hoped, I'd like to suggest that you are now an important source of knowledge for your own and other business ventures. The virtuous circle of innovations created by young entreprenuers cannot be understated and should be encouraged and respected far more than property speculation if we are to become a truly innovative economy.
As for 'investing' in housing - every economic indicator suggests Australian property is the one western asset bubble which has yet to pop, so I'd suggest you hold off for a few years. The previous government used a number of techniques to articifically inflate house prices in Australias capital cities, and the present generation is in serious danger of experienceing up to a decade of negative equity. Which is OK if you're reconciled to working for your lender for ten years before you start to see returns on your money - but quite frankly - there are better ways of spending your time and money. Property speculation is a dead end for individual investors, and for the community more generally.
Your business might not have achieved the returns you hoped but you did the right thing for youself and for the economy more broadly.
Conversations regarding home renovations should be considered a little like conversations regarding health - only to be broched when asked and even then with a degree of modesty. I want to know my friends are happy and healthy and financially sercure - if they're not then I'm concerned, but I only in a few cases do I need to know the finer details.
I have faith that Generation X is capable of talking about more than renovations and interest rates at dinner parties and BBQs. At least the ones I'm invited to and hold. In fact once they start spending their weekend engaging in cultural, community and family activity insted of house hunting a few of them will even begin again to offer some interesting cultural, philosophical, economic and even political insight. The asset bubble is slowly deflating, which is a good thing, bursting would be too messy, and property investment won't look so trendy as prices come down or stagnate, and we'll be able to return once again to the more cultured, community minded society we once enjoyed.
I don't know about Generation Y - I'm sure they'll manage to turn off their mobiles long enough to read a book they'll come good eventually.