Gen Z are unique. You're the first generation of digital natives. You haven't experienced the world without the internet. And with the internet and its boundless information and connectivity, you're more worldly than past generations. You're dreamers. You know there is more to life than a 9 to 5 job. In fact, you know it better than any other generation that I have worked with. It's inspiring.
And since many of you spend well over an hour a day on social media it's not surprising Gen Z shows a lot of interest in investing. There are 91.4 million posts relating to financial independence on TikTok. According to Forbes, one of the latest viral trends on TikTok is couples celebrating their financial freedom and wonderful lives sans kids. They call themselves "DINKS" - Dual Income, No Kids. Financial Independence Retire Early (F.I.R.E) is another trending term that is inspiring viewers to quit work and start enjoying life. Given these compelling trends, it is not surprising that a Deloitte study in the UK found that more young people are turning to social media for advice than their banks!
The problem is social media is a bit like reality TV. It feels very unrealistic. And in reality, most Gen Z's feel that they just can't get into investing.
Couple that with the fact you are the most likely to not be able to afford it.
A recent survey conducted by news.com.au indicated that "Gen Z and Millennials were far less likely to already own property, with just 26 per cent saying they owned their own home". Young Aussies are the most likely group to believe they will never be able to afford a home. Baby Boomers have the most property, Gen X are the second biggest owners, but each consecutive generation gets less as the cost of housing literally prices generations out entirely.
So what does Gen Z need to know about getting into the property market?
You don't need hundreds of thousands of dollars in income OR in savings to get in now
Affordability constraints are rated the biggest hurdle for Gen Z men and women, but they aren't thinking outside the box. The reality is that you don't need lots of capital to start. At Eda Property, we have helped young people make a start in investing in property with as little as $25,000 in savings and an income of less than $90k per annum. It's more about your willingness to take strategic steps, rather than the amount of money you start with.
Do NOT buy where you want to live
Just don't do it. Unless you have cash to splash, the most important thing to understand is what is important to you. Do you need capital growth (wealth accumulation) at this stage, or do you need yield (income)? I would argue that most people trying to change their wealth position need the former in capital growth. But once you have established what is important to you then find out how much you can afford and find the areas and styles of property that are most likely to provide this result with your budget.
Do not follow fads
The only way to know that an area is growing in value is if IT IS growing in value. Buying based on trends often means that you are following other investors and are probably in the middle, or worse, top of a cycle. If you are in a volatile market (a property market where prices tend to fluctuate a lot), then you are at a very high risk of losing money. Some regions or states display much higher volatility than other states. Do your research! Choose areas with stable growth potential.
Stop waiting - get in!
There are lots of ways to do it. Eventually, there will be many people that cannot afford and will never afford to get into property. In Australia we have been lucky, but that gap is closing. If you don't get in now, you might miss the chance to own property for generations to come.
Follow the fundamentals
Follow the maths and look for areas where average family incomes are rising, indicating a robust economic environment. Another key indicator is employment growth - areas with increasing employment opportunities attracting skilled immigrants are likely to experience property value growth. Finally, consider the quality of housing and the availability of infrastructure. Areas with good schools, healthcare facilities and public transportation are more likely to appreciate in value.
Keep it simple
Lastly, don't overcomplicate the process. There's no need to search for a magic formula or take unnecessary risks. Stick to the basics of research, financial planning and strategic investment.
While Gen Z faces significant challenges in entering the Australian property market, it is NOT an impossible feat. Spend less time bemoaning the luck of others on social media and more time focused on getting in at any cost. Work harder for a little while, spend less and you will be able to achieve financial freedom over time. Remember, it will get worse before it gets better. But with the right mindset, research, strategic planning, and a willingness to take action, you can overcome the odds and buy property. By focusing on affordability, avoiding trends, acting promptly, and adhering to fundamental principles, Gen Z can navigate the complexities of property investment and secure their financial future.
I am not Gen Z, unfortunately, but I have been in situations where it felt hopeless. Earning less than $50,000 with two young children and no financial support. I was starting again at life. I dedicate myself to helping others overcome the one thing that is stopping them, themselves. You can achieve financial freedom through property; you don't need the 'bank of mum and dad'; you don't need to be earning hundreds of thousands a year; you just need some good advice.
