House prices: millennials choose to buy shares instead of the first house

Young Australians are increasingly turning away from the property market, choosing to invest their savings in something else entirely.

Saving up for a first home has been a financial rite of passage for millions of Australians, but a growing number of the younger generation believe the great dream of home ownership is dead.

Due to a severely inflated housing market, millennials (Aussies born between 1981 and 1996) have been turning to the more flexible stock market to secure their financial future in unprecedented numbers.

A survey released by Commonwealth Bank in December found that since the start of the pandemic in February 2020, millennials accounted for more than two-thirds of the million new customer accounts opened on its CommSec business app.

Of those customers, 43 percent said they would choose to invest rather than spend their money, and 38 percent of that number chose the stock market over the traditional path of saving for a property deposit for long-term financial security. term.

It’s a statistic that comes as no surprise to Bryce Leske, the podcast superstar turned millennial retail investor.

The 30-year-old is best known as the co-founder of the popular Equity Position Relationships podcast (with co-host Alec Renehan), which aims to help ordinary Australians navigate the world of finance and investing, regardless of their financial background.

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Since he launched the podcast in 2017, he’s seen a huge increase in young people turning to stocks instead of physical investments like real estate.

“When we started the podcast, investing felt like something that was out of reach for ordinary Australians… it was dominated by the idea that it would just build wealth through housing,” Leske said.

“If you think about the costs involved in putting together a huge deposit, taking on the legal costs, the stamp duty… the price of housing ends up being out of reach for many people.”

Mr. Leske revealed that some of the clients who came to him had deposits in excess of $100,000, but were still unable to obtain a mortgage loan.

As a result, an increasing number of potential owners were looking to the stock market to “make their money work.”

For management consultant Ben Spoor, 27, the sting of the extra costs associated with securing a first home meant that investing in stocks was a much more attractive option.

“I did the numbers and owning stock is easier and better for me than an investment in property,” Spoor said.

“Investment properties are a hassle and have a lot of costs that people forget about. Stock ownership (index funds, not direct stocks) is set and forgotten.”

For Brett Hall, 35, the risk of being leveraged into a volatile mortgage payment plan was a key factor in his decision to focus on the stock market for his young family’s financial security.

“(My wife and I) weighed the property issue, but we really didn’t want to flirt with mortgage stress,” he said.

“Shares are liquid; if we want to buy a house, we can sell our shares and get a deposit… it is very difficult to go the other way; the entry and exit risks are much higher.

“People sometimes say rent money is dead money, but I would say interest is the same thing. So what kind of dead money do you want to pay?

Hall also saw the decision to invest in stocks as an opportunity to boost her children’s financial future.

“We just set up an ‘informal trust’ for our son,” he said, referring to investment accounts that can be invested on behalf of minors.

“You can start buying shares for $500 and you’re in, you’re doing something, instead of waiting until you have a couple hundred grand before you make a deposit.”

Leske knows that navigating the world of the stock market can be confusing and overwhelming, with myriad acronyms, complex equations and terms like “two-tier public offering” and “theoretical ex-rights price” alienating potential investors.

It is this wall of jargon that the Equity Mates team seeks to break down in order to empower all Australians to make the most of the opportunities available to them.

“Our whole mission is to make the markets accessible and really show people that investing is for everyone,” said MrLeske.

“A lot of our community members think investing is something you need a degree in, or that you need to be a financial expert to really understand where to put your money, and that’s just not true.

“We’re just trying to inspire people to get started.”

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