For several months, many Gen Yers have been battling against investors and other home buyers to purchase their first home.
Due to all these interested buyers, many Gen Yers have been unsuccessful.
There are several factors that have affected the Gen Yers chances at successfully purchasing a property. Firstly, an increase in housing prices has meant that many properties are out of reach for some Gen Yers. According to the Australian Bureau of Statistics, there has been a 5.1% growth throughout the major capital cities from June 2013 to June 2013.
Secondly, as interest rates are at a record low, many investors are starting to move back into the property market. According to the Australian Bureau of Statistics, investor lending is 23.7% higher than this time last year. These investors are swooping in and buying properties in the lower price bracket, resulting in Gen Yers missing out on affordable housing.
Thirdly, many of the first home buyer benefits including the First Home Buyers Grant have been abolished. Unless it is for the purchase of a brand new home, many Gen Yers are finding that there is little assistance available.
As a result, many Gen Yers are moving back home with their parents in order to save money. According to a recent McCrindle Research report, an average of 2.6 people now lives in each home. In order to cater for the larger household sizes, many families are building extensions or granny flats.
A granny flat could be a good idea for a couple of reasons. Firstly, your kids will still be able to be independent, but will not have to spend a fortune on rent. Secondly, when they do eventually buy their own property, you can then rent out the granny flat to others for extra rental income.
The property market can be unpredictable, so adding an extension or granny flat for your Gen Y kids could help them save for a deposit and also give you an option for extra income in the future.