Tim Gurner, an Australian multimillionaire and property developer, has accused the young of today of wasting money as they attempt to climb onto the property ladder. He suggested that they should stop eating “avocado on toast and buck up their ideas” which has not gone down very well with many people. However, does Tim Gurner have a point? Are the young of today wanting to enjoy a high-class lifestyle and ignore the fact that many people used to save to climb onto the property ladder?
The cost of living
There is no doubt that the cost of living continues to rise year-on-year, as do property prices, but wage inflation continues to lag. Many people do want to enjoy a lifestyle which takes in many luxuries which were not around in years gone by as well as at least one holiday per year. This does prompt the question, if young people are looking to climb onto the property ladder, whether this is in Australia, the UK or anywhere else, will they have to give up part of their “modern-day” lifestyle such as holidays?
Whether or not you agree with Tim Gurner many young people of today feel it is their right to be able to climb aboard the property ladder without necessarily saving beforehand. We have seen the rise and fall of 100% mortgages and the financial crisis of 2008 came about because many people overstretched their finances and were unable to cover their financial liabilities. This is not the case for all situations because for example areas such as London now seem to be dominated by rich investors, both domestic and overseas, who are pushing prices beyond the affordability of the general public.
There may be some truth in Tim Gurner’s comments but even if it prompts people to discuss climbing onto the property ladder in more detail, surely he has done us a favour?
Baby boomers passing on their wealth
While the suggestion that young people want an expensive lifestyle and a home, but are unwilling to save, has prompted some heated debate there is more to come from Tim Gurner!
He also believes that the huge wealth accumulated by baby boomers, much of this in the property market, is the answer to the Australian housing crisis. It is not difficult to see where Tim Gurner is coming from with this comment but surely yet more investment in Australian property, with inherited money, would push prices higher and higher, even further out of the reach of the general public? The issue is not quite as straightforward in places such as the UK where there is an inheritance tax and a threat that the inheritance tax allowance will be slashed in the future.
Some people see the irony in the fact that Tim Gurner, a property developer, is effectively telling property buyers how to act in the future. On the flip side of the coin, Tim Gurner has been there and done it so he knows how to invest, how to save and has been willing to give up some of the luxuries of life in his youth. We would welcome any comments that you have about Tim Gurner’s view on the Australian, and in effect the worldwide, housing market. Is it simply a case of saving money by cutting out some of the luxuries of life? Will the leave baby boomers bail out their children when their wealth is passed on?