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Property ownership is not out of reach


Property ownership is not out of reach – perhaps you are just looking at it wrong?

I often hear people from varying generations say "I cannot afford to buy a property", but I think an important distinction to make is that they can buy property, but perhaps not necessarily where they want to live.

I think this is an interesting phenomenon and I wonder if people in other expensive cities take the same stance? I wonder if a person raised in NYC gets upset that they cannot afford to buy their own dream space in Manhattan? Or, is there a general understanding that it's aspirational and that "I'll work hard so I can afford it one day". Interestingly, if property didn't perform the way it does, particularly in the blue chip locations, no one would want it and/or complain about not being able to afford it……… now that's something to think about.

Rent-vesting (renting where you live and buying elsewhere as an investment) is a topic of common conversation within our industry and I think that it makes alot of sense. For example, a young professional couple living in the inner suburbs of Sydney, both employed in white-collar jobs in the CBD who currently rent a 2-bedroom apartment for $750 per week, if they were to buy a comparable property for themselves, they would likely part with $1m-$1.1m for the honour. Now, is this the best decision for them financially? They do gain emotional benefits from owning their own "dream in the sky", but let us be practical – could that money be spent better elsewhere? I believe the answer is yes.

There are numerous ways that $1m could be invested to buy multiple investments around Australia. The timeless maxim comes to mind – don't put all your eggs in one basket.

Headlines would read:

  • Higher income than the rent they are currently paying;
  • More diversified risk exposure (asset classes and geography) and/or;
  • Tax deductible costs.

PLEASE understand I am not saying buying your own home is a bad idea, I am merely saying that from an economics perspective the world cannot/will not facilitate your choices. Buying property is achievable, but if you choose to live in some of the most expensive suburbs in Australia then perhaps you need to rethink your strategy.

Rentvesting is not an endeavor anyone should execute alone – there is a reason people buy in their backyard, because typically that is all they understand. If you are looking to buy property, seek professional advice.

Article written by:

JLL's Buyers Advocacy Division;

1300 795 960

buyersadvocacy@ap.jll.com

jll.com.au/buyersadvocacy

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