How Gen Z's Can Buy a Property

Dale Gillham, Chief Analyst and Head Trainer of Wealth Within

By Dale Gillham |

Buying a property is a significant financial decision for anyone that requires careful planning and preparation. With interest rates rising, Gen Z are feeling even more pressure to get into their first home, so what are the steps you need to take to buy a property.

Why Gen Z need to get smarter about buying property

First and foremost, Gen Z need to stop listening to the baby boomers because they are repeatedly told how hard it is to get into the property market. But if the younger generation are going to move forward in a positive and more financially rewarding way, we need to change the message we are sending to them.

Let’s get one thing straight, living in a house that has your name on the title does not give you financial security. What it does do is handcuff you to a bank in the form of enforced slavery where you work hard to pay the bank, so they make lots of money from you. But all this does is create a great deal of stress, which can potentially lead to mortgage stress, as more and more people are experiencing.

Gen Z often say they can’t afford to buy where they want to live, so they live where they can afford. However, unlike the baby boomers, Gen Z are easily enticed into debt to have everything, so they can live a great lifestyle. But what sort of lifestyle is that, if you are constantly worried about the pressures of paying the mortgage. What if there was a better way.

If the goal is to get into the property market and build wealth, then why not do it smarter rather than harder. Young people should invest in an investment property and have the tenant and tax man pay for the mortgage, leaving them free to live where they want to live.

If the tenant is paying $500 per week in rent and the tax man is allowing you to claim on interest payments and other costs, then even in the current interest rate environment, Gen Z won’t have to use much, if any, of their own money to fund the mortgage repayments. This leaves them free to live where they want, giving them a better lifestyle and less stress. So, how do the younger generation get a deposit together?

Start saving and aim to have a deposit of at least 20 per cent of the property value. To accelerate the process, each time your bank account gets above $1,000, use that money to buy good quality blue chip shares. That’s because you’ll receive more in dividend income than the interest payable on your bank account. The other benefit is that, on average, your money will grow above inflation.

While you’re saving, start educating yourself on the property and stock market and do your research. In regards to the property market, you need to look at the best areas to invest regardless of which state the property is in. This is an investment, and you need to treat it like that.

To get ahead financially, it’s wise not to follow the herd. Having an investment property that is being paid for by a tenant and the tax man gives you far more security and less stress than buying a home to live in. Buying a property isn’t a complex process, if you have educated yourself, and with careful planning and preparation, you can make your dreams a reality.

What were the best and worst performing sectors last week?

The best performing sectors included Information Technology up 2.41 per cent followed by Consumer Discretionary up 1.85 per cent and Communication Services up 1.16 per cent. The worst performing sectors included Energy down 6.13 per cent followed by Materials down 5.71 per cent and Healthcare down 0.93 per cent.

The best performing stocks in the ASX top 100 included Xero up 14.69 per cent followed by Sonic Healthcare and Insurance Australia Group, which were both up 4.73 per cent. The worst performing stocks included ALS down 10.13 per cent followed by Woodside Energy Group down 9.90 per cent and South 32 down 9.03 per cent.

What's next for the Australian stock market?

Early last week, the All Ordinaries Index looked like it would trade up for the first time in a month although the rise wasn’t strong, which meant there was still uncertainty in the market. This was confirmed on Friday, as the stock market fell 2.21 per cent erasing the gains made in the prior week.

While the fall is in my target zone for the low, which was between 7,200 and 7,500 points, we now need to expect further falls to the lower end of my target range given the strong move down last Friday.

Once again, it will pay to be patient and wait for confirmation as the first step to success in the stock market, whether you are an investor or trader, is to get the direction of the market or stock right. Until direction is confirmed, your risk is high, and the outcome is uncertain.

For now good luck and good trading.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the bestselling and award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online.

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