Are your Gen Z and Millennial clients really locked out of the housing market? 4 Strategies

housing market

Currently, the media is widely reporting on rising interest rates, inflation, and escalating property prices. Over the past year, the RBA has enacted a series of increases in the cash rate, which means that people will be paying more on their mortgage repayments then they previously had been. Plus, since 1993, median house values have increased 412%.

These issues have become so prominent that the younger generation are becoming highly concerned for their ability to purchase a home or property. It is easy to see why our younger clients are struggling to see their affordability in the current housing market. But, are your younger clients really locked out of it?

This article aims to help you understand how to encourage your younger market to pursue their dream of homeownership or property investment, giving reason as to why they shouldn’t feel stressed about being “locked out of the housing market”. 

1) How can your clients budget to save for a house deposit?

There are certain things that we all pay for everyday that we don’t even realise are quickly adding up, such as music and entertainment subscriptions, and gym memberships. So, what elements should our clients be factoring into their budgets?

1- Subscription services have become increasingly popular in recent years, with options like Spotify, Apple Music, YouTube Premium, Netflix, Stan, and Disney+. The combined cost of these services can quickly add up and put a strain on your clients’ savings each month.

One solution to recommend to your clients to reduce the impact of these services on their finances is to consider sharing subscriptions with their family or friends. Additionally, it may be worth evaluating with your client whether they truly need multiple streaming services or if they could get by with just one. Taking these steps can help your clients save money and stay within their budget.

2- For many people in their 20s, travel is an essential part of life. However, does this age group really need to choose between travel and saving?

If your client is working towards that goal of owning a property or home sooner, they may have to sacrifice travelling to high-end, luxurious locations in their younger years, to save for their financial goals. Alternatively, you can help your clients understand the benefits of sticking to a budget when they travel, by booking in advance, staying in low-cost accommodations, and exploring more affordable destinations.

3- Buy now, pay later services like Afterpay and Zip Pay may seem like an easy solution for your clients when purchasing items they can’t afford upfront. However, if your clients can’t afford to make a purchase right now, they probably can’t afford it in 2 weeks’ time either. It’s important to let your clients know to avoid using these services as they can foster poor spending habits and lead to a reliance on these services.

Moreover, buy now, pay later services can result in high-interest charges and impact your clients’ credit scores if they miss payments. It’s wise that your clients stick to a budget and only make purchases that they can afford to pay for in full, rather than relying on these types of services.

4- If your clients have spare time during the week, they might consider taking on some extra work to boost their income. Since the pandemic, there has been an increase in flexible job opportunities, such as working from home or doing food delivery, which allows people to set their own schedule and choose their own hours. By taking on additional work like this, people can earn some extra money each week and gain a competitive edge over others in their age group. 

2) Can your clients take advantage of Government schemes?

There are currently a few schemes and grants that can help younger generations to purchase their first home, depending on the state that they live in. For example, in NSW there are currently 4 schemes:

  1. First Home Owners Grant (FHOG)
  2. First Home Buyers Grant (FHBG)
  3. First Home Low Deposit Scheme (FHLDS)
  4. First Home Buyers Choice (FHBC)

By exploring these options with your client, you can find a scheme or grant that best suits their needs and budget. Whether they’re looking for assistance with their deposit or a grant to help with purchasing costs, there’s are pathways available to help your younger clients achieving their goal of purchasing a home or property. 

3) Can your clients use a guarantor?

When someone wants to take out a home loan but doesn’t have enough savings or a good credit rating, they may consider using a guarantor. Usually a family member, the guarantor takes on the responsibility of paying back the loan if the primary borrower is unable to do so. To secure the loan, the guarantor provides equity, often in the form of a portion of their own home.

As the property market is at an all-time high, the younger market are seeing that their ability to secure an affordable home is getting harder and harder. It may be necessary to discuss the option for a guarantor with your client, as the guarantor can help reduce the risks that the banks place on these types of applicants. 

4) What sacrifices can your client make?

When a client is fully committed to buying a home or property, it’s important to be realistic in the sacrifices that you discuss with them. Whilst most young people are partying, travelling, buying new cars, and eating out regularly, those young people wanting to get into the market now need to be willing to make sacrifices, especially in this current market. For instance, discussing certain property locations with your client that are deemed more relevant and realistic to their situation, is a good starting point.

It is important to note that when your client first gets into the property market, this is the hardest challenge in the whole process. Once this milestone has been achieved, your client can focus on working towards longer-term goals, such as owning their “dream house” or the “family home”. 

Can Vision Aggregation help you assist your younger clients?

Although younger generational clients may face more challenges than previous generations in securing their first property or home, as mortgage brokers, we need to assist them in every way, help them understand the process in purchasing property, and provide them with expert advice. As mortgage brokers, the best thing we can do is stay in regular contact with clients, even potential ones, by offering assistance where needed, and providing a superior level of service to your clients, young or old.

At Vision Aggregation, we support our mortgage brokers to help them come to a conclusion with their clients, to help them meeting their property goals and secure a strong financial future. Call Vision today to see how we can help you and your clients.

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