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Last time I was at an auction with my son Felix it was 1994, and he was in my stomach. Fast-forward the videotape, and he has an advertising job, finance pre-approval and a kerbside spot in front of the bloke auctioning a 1930s flat on Inkerman Street, St Kilda East.
Before proceedings two Sundays ago, we had lunch at the Galleon in St Kilda. Felix, his gorgeous partner Pip, his dad and me. Nervous and pumped, the 28-year-olds mulled tactics. Bid boldly early or wait and suss out what others have in their hand? Just roll with it, the parents said.
Sky-high prices and stagnant wages has made many young Australians decide to not buy a home at all.Credit: Simon Letch
Inevitably, we went down the days of yore path about our first home. Buying a place was just what you did then, farewelling rentals along with single life. A Californian bungalow with big backyard and Axminster floral carpet, ours for $122,000 in 1991. Our firstborn Jack came home from hospital there, then we upgraded when Felix – later joined by Sadie – was on the way.
Our winning bid of $172,500 on a fixer-upper in Williamstown was just under double our combined income. Yeah, interest rates were higher and the house needed two renos, but the value still seems miraculous compared to what my kids and yours need to spend versus what they earn if they want to buy a place now.
Now that our three are adults, there’s lots of talk about next steps. Relationships, careers, babies. Like they did as kids, our boys still share mates, a footy team, sense of humour. Both have six-figure salaries. But they’re divided on how to live in one of the most expensive property markets on the planet.
Felix is all about buying. “The Australian dream, Mum, haven’t you heard? Although it’s hard to know if it’s your dream or what society says you should want. But it is what I want.”
Two years ago, Lix got real after a determined spending frenzy that included a tattoo gun and multiple motorbikes. He and Pip created a spreadsheet to map projected and actual savings for a deposit that was more than the total price of our first home.
One night they hosted us and Pip’s parents for dinner at their Footscray rental. Lasagne plates cleared, the real main event was served up: a presentation of their current finances, their goal and what a small chop out from us – to be repaid – would mean.
It was a pretty good investment pitch. The four parents shared a look: this could bring us closer to grandchildren. We were all in. Adam and Denise went further, offering a rent-free room at theirs while the wannabe home owners saved.
Two research findings have struck me in the last weeks. The first: more than two in five first-time buyers need to tap into the bank of mum and dad. The second: renters who don’t buy by their early 30s are less likely to achieve home ownership later in life than their parents’ generation.
That scenario is one of Felix’s drivers. “I see buying as an inevitability, and you may as well just get it out of the way. The alternative is horrible. If you rent forever, what happens when you retire and are renting on the pension, with no housing security?”
Jack works in banking, has an economics degree, understands money. At 30, he’s a renter who “long ago gave up” on owning a home in a capital city.
“Enslaving myself to a bank – yes, I get the irony – is highly unattractive. And housing is completely overvalued, so I don’t see paying a million dollars in interest on an average property as a rational investment.”
Parental financial lifelines are beside the point, says Jack, who asks what relying on generational wealth says about our economic system: “Plus that’s conditional on me then entering a massive debt, which means a worse economic position.”
I love they’re both doing what makes sense to them. Not so great: Pip and Felix missing out at the Inkerman Street auction. It’s like waiting for a bus, we tell them. Another one will be along soon. The hardest bit, the saving, is done.
Kate Halfpenny is the founder of Bad Mother Media.
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