Top tips for Millennial family buyers – John McGrath

Depending on where you live, Winter school holidays are either fast approaching, or have already begun. With our young families now able to relax for the next few weeks, I want to explore their position in our property market.

This especially applies to the Millennials generation – or 30 to 40-year-old mums and dads – with primary school-aged children, or those in early high school.

Let’s start with some basics.

Born between 1981 and 1996, Millennials now make up the largest segment of the workforce in Australia. A well-educated group raising young families, this generation still remembers a time before technology changed everyday life.

And perhaps even more than our younger Gen Xers, Millennials are keen to buy their first home, sooner rather than later – if they haven’t already.

CommBank data released in March showed the average first home buyer is 33 years old, and has a first home deposit of 16% with a loan size of about $480,000.

For most young Millennial families, the ideal home features the same key points, that is, proximity to good schools or childcare centres, as well as amenities like supermarkets, public transport, parks, and medical facilities. They also want a safe, family-friendly layout and location, including outdoor space.

Unfortunately for Millennials, it’s no secret that property values have risen sharply since the pandemic, especially in south-east Queensland, Perth, and Adelaide. Even as national values flatline, according to Cotality’s latest Home Value Index, these locations have experienced annual upticks of between 12.3% to 25.8%. And, only Adelaide still offers median values below $1 million.

Meanwhile, many Millennials are still repaying HECS debts, and may only have a single income, due to maternity or paternity leave.

As a result, many of these young parents are being forced to continue to rent at high prices, or, they’re increasingly seeing homes snatched up by buyers with stronger borrowing power.

But there’s plenty of positive property news for Millennials too.

Firstly, this generation is well-educated. In other words, they’re smart and confident plus they’re well-versed in technology and know how to use it to find their ideal first property.

In further good news for Millennial families, they may be able to enter the property market by different ways and means.

For example, the CommBank data also shows that six in 10 first home buyers now purchase with someone else. With Millennials often married or having a partner, this is good news for this group.

At the very least, first home buyers as a whole are, in CommBank’s words, showing a “growing willingness” to buy with someone else, including friends and family members.

Talking friends and family, Millennial families may also want to consider guarantor support.

This plan allows buyers to lend up to 100% of their home loan from a friend or family member, without needing a deposit. Instead, your guarantor will use the security on their own home as a deposit.

Other options include the range of first-home buyer government schemes open to people of all ages. Some of these, like the federal Help to Buy Scheme and Queensland’s Boost to Buy shared equity scheme, only require a 2% deposit.

City-based Millennial families should also consider looking further afield to regional centres. The growing popularity of these locations has resulted in an increase in amenities that can easily compete with their suburban counterparts.

This includes many top-ranking private and state schools, such as those on the Sunshine and Gold Coasts, as well as inland Toowoomba and Ipswich. Better still, regional hubs usually offer more affordable house prices than their city counterparts.

I certainly believe that that there are more possibilities on offer to young Millennial families than first meets the eye. So, I encourage this group to revisit and reinvestigate their property options.