$5m gap: brutal homeowner truth exposed

The decisions you make about your home right could have massive financial repercussions, good and bad for you in the years to come.

OPINION

For many years we have associated being financially successful in Australia with being intelligent in business. However, with real estate values soaring, it appears that financial success is a lottery.

I look at my own parents’ situation. For fifty years, the gap between buying in Belmore versus Paddington might have been $50k. Today that gap can be $5 million. So, all things being equal, the person who chose to buy in Belmore versus Paddington might be worth $5,000,000 more in net worth.

In fact, this is one of the biggest challenges young Australians are facing when it comes to housing.

A hated one-bed unit was the first step on the way to a beloved semi.

Now is the time we redefine as a nation what success looks like – because if we don’t – we may have generations ahead of us that feel neglected and depressed by their inability to buy real estate. We may end up in a society divided by the owners of real estate versus non-owners of real estate. We must move away from any notion that a homeowner is more superior than a non-home owner.

This does not mean you fly the white flag saying, “I give up”. There’s no point, you could never afford to buy. In fact, I am seeing more and more young people accept that they are not going to love their first property.

Your first home doesn’t have to be something special in a dream spot. Eighty per cent of winning is just the beginning. Just getting into the market is the answer

My first home was a tiny one-bedroom unit on a busy road in Punchbowl. I didn’t like the unit or the location, but I only had $80,000 to spend and it was my launching pad to a semi in the Inner West.

Now, having worked in real estate for 37 years, I have come to the conclusion that there are thousands of average income earners who have become multi-millionaires by following one practice …

Buy real estate, and never sell.

My advice to aspiring homeowners is this: just buy when you have a small deposit and use this as a stepping stone. I bet there are plenty of intelligent professionals on decent incomes, who have never pulled the trigger on home ownership and have become a lifelong tenant. It’s not timing the market – it’s time in the market that makes you wealthy.

* Tom Panos is an auctioneer, real estate coach and trainer with over 30 years experience in the industry.

Originally published as $5m gap: brutal homeowner truth exposed