What does avocado toast have to do with millennials buying property? If you asked me a month ago, I wouldn’t have an answer for you.
About a week ago, however, an Australian property tycoon inadvertently made the link when he quipped that millennials should stop buying avocado toast if they ever want to buy a house. Tim Gurner, 35, reportedly said that, “When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each.”
Given that forsaking smashed avocado will save you about $1,040 annually and with the median payment for a home in Sydney currently at $200,000, many of the people in my generation understandably bristled. (If you do the Math, a hipster millennial who goes without the darn fruit would need to save up for two hundred years just to be able to afford that. So, you could be saving money long past the time of your demise, and still only own HALF a proper house. Oy, vey.)
Now, I live in the Philippines and fortunately, the pale green fruit du jour is rather cheap here, but you still don’t see a lot of people my age buying houses or property because they are so darn expensive. Clearly, avocado consumption has little to do with it.
So, what is actually the biggest mistake that millennials are making when it comes to buying their first homes?
It’s actually quite simple: they’re putting it off for too long.
Whether it’s because of the economy or avocado toast (probably the former), the world is facing a generation of lifetime renters for the first time. This is terrifying because it means that millennials could very well be forking out $1.5million on rental expenses throughout their lives and have nothing to show for it at the end.
The key, apparently, is to get started on the planning stage as early as possible. For starters, learning how to save is crucial. Let’s say you sign up as an apprentice in Australia and are earning first-year wages. If you put aside about $50 a week, you could have about $10,400 saved by the end of the four-year apprenticeship period. If you put these savings into an account with a high compound interest rate, you would certainly end up with more and perhaps be able to put a down payment on a property outside the cost-prohibitive inner Sydney city centre.
While everyone would like their first property to be their dream home, yours doesn’t have to be. The longer you delay, the harder it will be to buy for you to get on the property ladder because each year you dally equals lost capital growth, not to mention thousands of rent dollars paying off your landlord’s mortgage instead of your own.
As Nike’s slogan goes, we millennials should just do it: start saving up, look for properties that are still affordable, and make the necessary sacrifices to begin building up our real estate portfolios. It doesn’t matter if the only properties you can afford to put a deposit on are outside the city or are smaller homes. Just get your foot on the first rung so you can keep climbing up the real estate ladder and hopefully end up with your dream home as well as a slew of other income-generating properties by the time you’re retired.