The Reserve Bank has left Generation Y’s dreams of owning a home on hold for the 47th month in a row by allowing interest rates to remain at record lows.
The official cash rate remains at 1.5 percent, meaning wealthy baby boomer investors can continue to enjoy record low rates on the mortgages they hold over properties which they rent back to young people at excruciatingly high rents, thereby destroying any hopes the younger generation may have of purchasing a home.
As a result, each investment property that a baby boomer owns provides even greater equity for Gen Xers to continue to bid aggressively at auctions against young people who are hoping to have a foothold in the market.
The interest rates decision, combined with government’s unwillingness to budge on negative gearing policy means that Generation Y’s dreams of home ownership continue to remain on hold.
“Their only hope is rich parents now,” one mortgage broker told Broken News. “The median price for property in Sydney is now $1.2m. You will need a deposit of $240k to buy that. Good luck saving that much money while you’re still renting.”
“Oh. And by the time you do save enough – in the year 2035 or something like that – the cost of the place will have tripled anyway.”