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The changing traditions of home ownership

Neha Kale

In the last few years, rising house prices and gloomy market conditions have had a major impact on the Australian property landscape. These factors have sparked a shift in housing affordability that is rewriting the country’s home ownership traditions.

RaboDirect’s latest National Savings and Debt Barometer shows that nearly 30 per cent of families surveyed expected to enter retirement while still saddled with a mortgage. Furthermore, many couples are too financially strapped to help their children enter the property market, with 41 per cent only expecting to repay their mortgage by selling the family home.

This crisis is compounded by escalating mortgage rates and a debt-to-income ratio that has jumped fivefold in the last 20 years, according to findings by Morgan Stanley.

So what’s the bottom line? Boomers can no longer expect equity from the family home to fund retirement, and their Gen Y children can no longer rely on parental support for their first leap into the property market. Luckily, it’s not all bad news ”“ start building your nest egg now by embracing these wallet-friendly measures.

Spend smarter now

Becoming a smarter spender doesn’t necessarily need to involve a lot of sacrifice, but it does mean being more strategic about making your dollars count. If you drive to work, why don’t you swap steep petrol costs for a weekly ticket? Or if you buy your coffee and lunch each day, make the extra effort to bring your own supplies ”“ you’ll be surprised how quickly these small savings add up.

Get on board with high interest savings accounts

High interest savings accounts and term deposits are powerful ways of making your income work for you, not against you. High interest savings accounts yield competitive interest rates and can give you strong incentives to put more cash away, while term deposits and investment accounts are an excellent means of growing your nest egg.

Self-managed superannuation funds

It’s never too early to start thinking about your superannuation. Switch to a self-managed super fund and make voluntary contributions while you can. You’ll thank yourself later.

Evolving home ownership trends don’t have to equal financial scarcity ”“ just take the right measures now to get a head-start on building your best possible nest egg.