A luxury apartment developer’s much-maligned comments on the property market have been trashed by millennials, but he might have a point or two.
“When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” Mr Gurner told 60 Minutes on Sunday, becoming the latest to unleash the wrath of the scorned millennial.
And yes, it may seem a bit rich for a 35-year-old who got his start with a $34,000 loan from a family member, whose $400 million fortune was created by a freak property boom, and whose Instagram is full of scantily-clad models, Aston Martins and imported champagne, to give advice to struggling first home buyers.
However, if we suspend disbelief and peer beyond the luxury wristwatches, tailored suits and sumptuous apartments, there might be a few important lessons hiding underneath.
Maybe you are spending too much. Mr Gurner’s main point was that Australians’ spending levels are “dangerous”, especially when they are “spending $40 a day on smashed avocado and coffees”. Putting aside the fact the economy needs us to spend, it’s true that saving for a house requires, well, saving. If you really were spending $40 a day on avo and coffee, halving that could save you $5000 a year.
Can you really afford that overseas holiday? The developer accused young people of wanting to “travel to Europe every year”. That’s probably not true. But plenty do travel during or after university, often for months at a time. A survey by ME bank in November 2015 found that 41 per cent of Generation Y had delayed or downsized holidays to get into the property market for the first time. Perhaps a downsize isn’t enough. The poll could point to the need for more Australians to cancel their long holidays altogether.
Remember his age. Tim Gurner is 35. He’s in a long-term relationship. His comments are coming from a different place in what economists call the “life cycle”. Think about that before you start to panic. In 2011-12, the ABS found that 55.5 per cent of under-35 Australian couples (and 66.8 per cent of singles) did not own a home, outright or with a mortgage. So if you’re a 28-year-old, it’s not too late. Concentrate on saving hard and looking for Mr or Mrs Right.
Look further afield. The developer said young Australians “want the three-bedroom home in Malvern and Malvern East and Prahran [in Melbourne] and Alexandria in Sydney, and it’s just not sustainable or realistic”. If true, that would explain the disappointment of many millennials. Set your sights lower. For example, what about the federal government’s promised land release in Maribyrnong, 10km from the Melbourne CBD?
Invest in your career. Mr Gurner didn’t get his wealth from investing his savings in a get-rich-quick investment scheme. He earned it at his day job: property developing. While no one can expect to make $400 million from their career, you can easily earn six figures by picking the right university degree. Over their lifetimes, men with uni degrees earn $900,000 more, and women just under $1 million more, than high school graduates.
Work hard. Mr Gurner bragged about his work ethic. “When I had my first business when I was 19, I was in the gym at 6am in the morning and I finished at 10:30 at night and I did it seven days a week, and I did it until I could afford my first home.” Boasting aside, it’s probably good advice. You’re not going to buy a home by slacking off.
Don’t forget that renting has benefits. A new study published on Monday by the Australian Housing and Urban Research Institute found that home owners take longer to recover from losing their jobs than renters, presumably because it’s more difficult to move to chase work. So while you’re renting, make the most of it.
Consider other ways into the market. Mr Gurner suggested that first home buyers might have to “share with mum and dad” or “buy with a friend”. That’s also not bad advice, no matter how galling.