Buy property or take a trip: a tough choice for young adults

As property price rises make home ownership harder, many people give up saving, but there are ways to get a foot in the door.

Buy your first home or see the world?

Both are big-ticket expenses, but only one – property ownership – has the potential to produce long-term wealth and allow many more fancy holidays down the track.

However, a recent survey by investment platform moomoo found that almost half of Australians aged 28 to 42 listed leisure spending ahead of saving for a home deposit.

You can’t blame them. Travel is a wonderful life experience and much more affordable than a 10 or 20 per cent deposit for a median-priced Aussie home, currently $768,000.

Deposits today can cost $150,000, out of reach for many people and almost 20 times more expensive than the $8000 moomoo says it costs for a three-week holiday to Europe including flights, accommodation, food and insurance.

The big problem with spending every spare dollar on travel and other experiences is that all you are left with at the end are memories, and no chance of having a secure roof over your head.

However, despite surging home values, it’s possible to achieve both.

We still hear of young adults owning multiple properties before 30, working hard at multiple jobs and using investment strategies, albeit often with advice or financial help from parents or grandparents, to grow their wealth. Many of them travel, too.

Here are some common ways to get a foot in the property door despite high prices.

START SMALL

People like to buy in areas they know, but if those areas are close to capital cities or the coast, they are going to be too expensive.

Travel is great for the soul, but financial security is pretty handy, too. Picture: iStock

There’s nothing wrong with seeking a cheaper house or unit first, and using it as a stepping stone for a bigger, better property later on. It’s how many successful real estate owners start out.

INVEST FIRST

Also called rentvesting, this is the idea of renting where you want to live, and investing where you can afford. That may mean outer suburbs, regional areas or a different state, but it gets you in the property game.

More young adults are becoming property investors while still living at home with mum and dad. This saves them from paying a high rent, while their tenant helps pay their mortgage.

THINK IN PARTNERSHIPS

Teaming up to profit from property is becoming increasingly common.

Family and friends are a starting point, and strong legal agreements are needed here, but people also use fractional investment platforms and real estate investment trusts to buy pieces of real estate and share the growth with others.

LEARN THINGS

There’s a pile of government programs, grants and concessions to help new home buyers get into the market with tiny deposits, tax-assisted savings and cash handouts.

Knowledge is power, and a few hours of research will pay off.

MAKE TIME YOUR FRIEND

Once you hold a property for several years, the initial huge home loan effectively shrinks as inflation pushes everything else – including wages – up.

When the home loan is under control and eventually repaid, many more luxurious holidays await. But you won’t get there if you don’t start.