Is buying a house really a sign of financial success anymore?

You say, “Well you cannot live like previous generations and expect the same results in life.”

The previous generation didn’t always start off in houses like we see our parents in now; it was a progression to that. It often appears that the present generation is looking at the house their parents have now, and saying, “cannot live like previous generations.” Although I am pleased you recognise that an apartment is still achievable, (for a first home).

Here’s how it often used to be. First home for my parents after they married was living with my mother’s parents. Then they got their first home together; a flat, not a house, over shops in an undesirable location. One child. They then got their first house (likely about 100 sq metres, as that was the average size then). Now there were two children. They moved several times, until their final house was a home in a better suburb in Canberra. They did not get that first off, or even a house first off.
My experience. After renting for awhile (shared house and then a section of a house split up for rental), I bought my first house. It was the cheapest house in the whole of Canberra at the time, in a place people warned me not to buy. Drug dealers and house robbers lived in my street, but strangely they never worried me; even would say hello. After many years living there (the area improving), I was finally able to move and have a nice house built.
Start small; don’t expect what you have been used to. Buy an apartment, get equity and move on.
These days the first home is more likely to be an apartment, rather than a house. But an apartment doesn’t have to be the last home.

Maya,
You can’t possibly be trying to say it isn’t significantly harder for the younger generations to buy a house than it was in the past.

All the data shows this to be the case.

But if you want anecdotes, my parents bought a house in central Canberra at a small multiple of my father’s below average wage.

It would not be remotely possible to do that today, the costs are ridiculously higher on all metrics.

Of course it’s harder to buy a house these days, that’s why people need to lower their expectations and buy an apartment as their first step. My parents first home together was a flat. That’s the first home I remember.
My words as a conclusion were, “These days the first home is more likely to be an apartment, rather than a house. But an apartment doesn’t have to be the last home.”
It appears you didn’t read what I wrote.

Maya,
No i read your comment and the tone it is written in. And I don’t agree with you.

“The previous generation didn’t always start off in houses like we see our parents in now; it was a progression to that. It often appears that the present generation is looking at the house their parents have now, and saying, “cannot live like previous generations.””

This is not remotely true and you even now admit it by saying it is much harder to buy a house.

The vast majority of previous generations did start off in houses unless they had a particular reason to live in an apartment.

The same houses that my parents and most other people’s parents started off in could not be afforded by people in the same situation today.

You’re claiming it’s about unrealtisic expectations when that is simply a lie older people tell themselves to justify kicking younger generations and maintaining/growing their own wealth.

And no, younger generations shouldn’t have to lower their expectations when the unaffordability is hugely driven by government policies and tax benefits deliberately aimed at maintaining and increasing previous generations wealth.

So how about instead of expecting to continue the massive intergenerational wealth transfer to older wealthy people, we actually enact policies that make it easier for people to buy a home?

This would also have the added benefit of redirecting investment funds into far more productive areas of the economy rather than the housing ponzi.

An issue two colleagues have had in Canberra is that they both bought small flats in two different parts of the city as their first step on the property ladder and the units are now worth less than what they bought them for. It can be a vicious cycle when there isn’t the opportunity anymore to affordably buy ‘land’ itself. It’s interesting that one was an older one bedroom apartment in Braddon bought for just $330k and it’s still dropping in value. Harsh lesson for her after the high annual rates and strata fees she pays.

So you are basically saying that people refuse to lower their expectations. Yes it’s true that most people got houses in the past as a first home. So what. Times have changed, there are more people than in the past. In recent decades, the city has increased at least 400%. That alone increased house prices, but there are other factors too. Now, an apartment will likely need to be the first home for many people. Later they can move to a house; it doesn’t need be a forever home. It’s a first step; to get out of the rental market.
I get annoyed at people who WON’T lower their expectations and then complain they can’t afford anything, when they can, but what’s available they won’t consider.
I was on a lower than average income (not a public servant) when I bought my first house, and to do so I had to lower my expectations from what I was used to, otherwise no house. It almost was one of those old flats I put links to, and if the very basic house at almost the same price hadn’t come on the market, I would have bought one of those cheap one or two bedroom flats, because that’s all I could afford. I found them depressing, but I would no longer be renting. A first step. I would have bought a house later, when I had some equity.

It is best if people think ahead and buy their first apartment before children. Then hopefully, they will have built up some equity and can buy a house.

As an added; these old flats, although very basic and boring, have no inflammable cladding to worry about, and are likely more structurally sound than some of the modern apartments.

BJ,
Yes I don’t think that buying units in Canberra at the moment (or for a while) is going to be a smart investment decision. Particularly not in Central Canberra, considering the (over) supply and proposed future projects.

Maya,
So what you’re basically saying is that it’s fine that the government policies have changed to further enrich existing owners and younger generations should just accept that the system has been stacked against them.

It is literally zero to do with people having unrealistic expectations and everyrhing to do with the property market being converted into a wealth accumulation and tax dodging sector for wealthy people.

So how about instead of expecting younger generations to basically enslave themselves so you can be kept in the manner you’ve become accustomed too, we encourage government’s to repeal policies that make housing so unaffordable?

The current situation is not the natural order of things.

Property should mostly exist as a place for someone to live, not to make investors wealthy.

And I say this as an owner of an above average price house so doing what I’m suggesting would actually cost me money. That’s how ridiculously out of touch I think the property market has become and how much it negatively affects pur economy and society.

Please explain how what you are talking about can be done. Stamp duty is being reduced to make it more affordable to buy a house, while rates are going up for present owners, making it more expensive for them. What else do you want? How do you get around the free market that sets the prices. The government can’t tell people what they can sell a house for. Do you secretly want to put people over a certain age out in the street, so you can take their house? It’s coming across that way. Most people only own one house. And those who do own more, if they didn’t, there would be nothing to rent. I do think that negative gearing should be looked at and changes made, but beyond that, I can’t see what else can be done. So please enlighten me as to want you want done.
We can’t keep spreading out further with green fields developments, as that unsustainable with public transport and encourages more car use. It’s also environmental, clearing bushland and farmland. We need farmland. I often think that people brought up in cities, can’t get that alien last thing through their urban heads. They are so removed from where food comes from. With the increasing population (which will unfortunately be pushed up again after Covid is over and the borders are reopened) people need to live somewhere. The least damaging way to build housing, is to concentrate it more, and that mostly means apartments and town houses. Therefore, many people, especially first home buyers, are going to have to live in them, at least for the first home. If you don’t want this to happen vote accordingly at Federal elections. I do.

environmental should be anti-environmental.

Maya,
Are you serious?

Just for the basics, removing negative gearing on existing property and the capital gains tax discount ( replaced with an inflation factor) would be an easy start.

The current market isn’t remotely “free”. If it was, I wouldn’t have a problem with it.