For the older generation, saving up for a home meant cutting out on expensive luxuries. Many millennials on the other hand are not prepared to give up the finer things in pursuit of the home ownership dream.
A recent report in an Australian newspaper got under the skin of that country’s millennials when the author, a baby boomer, slammed the younger generation because they chose to eat expensive breakfast rather than saving the money and putting it towards a deposit on a house.
The article, written by columnist Bernard Salt and published in The Australian, asked why youngsters of today chose to spend their cash on fancy breakfasts instead of being sensible and saving up for a property.
"I have seen young people order smashed avocado with crumbled feta on five-grain toasted bread at $22 a pop and more," he wrote.
He went on to say: "I can afford to eat this for lunch because I am middle-aged and have raised my family. But how can young people afford to eat like this? Shouldn't they be economising by eating at home? How often are they eating out? Twenty-two dollars several times a week could go towards a deposit on a house."
To say that the report has caused an uproar is a bit of an understatement. Everyone, from media houses to comedians and parliamentarians, has had something to say on the matter and much has been made of the fact that you'd have to eat an awful lot of cheap breakfasts to save enough to buy a house in any of the world’s larger centres.
We did our own calculations, basing the outcome on an AU$22 breakfast (which incidentally equates to nearly R233) and found the following: Firstly, the Australians are paying way too much for a bit of avo and feta cheese on toast. Secondly, you would have to eat an enormous number of these breakfasts in order to spend anywhere near the amount required to buy a house. For example: the average price of a sectional title home in Sea Point in Cape Town is currently sitting at around R2.7m. An equivalent property in Umhlanga in KwaZulu-Natal will set you back to the tune of around R1.2m while the average selling price of a sectional title home in Fourways in Gauteng is currently around the R1.3m mark. At these prices, youngsters would have to forgo eating 11 588 pricey breakfasts to equal the average sum spent on an apartment in Cape Town, 5 150 meals for the property in KZN and 5 579 breakfasts for a place in Fourways.
It all sounds a little ludicrous and the columnist concerned has been attacked from all sides. Restaurants have climbed on the bandwagon and have started offering discounted ‘avo toast’ breakfasts, comedians have also waded into the fray with one writing an article titled ‘I Stopped Eating Smashed Avocado and Now I Own a Castle’. While this may all seem a little over the top, it pays to remember that Australian property ranks amongst the most expensive in the world and many of the country’s young people have little or no chance of ever owning a home in one of that country’s larger centres.
To be fair, the original article discussed the sum needed for a deposit and not the full purchase price. However, even with South Africa’s lower priced homes this still equates to a fair number of meals. A 20% deposit on a property costing R2.7m equates to R540 000 (or roughly 2 317 meals) while you'd have to eat about 1 500 breakfasts to reach the sum needed for a deposit on a R1.2m home in KZN. Likewise, you'd need to eat around 1 100 breakfasts, with a total cost somewhere in the region of R260 000, to come up with the sum needed for a deposit on a home costing R1.2m.
The point we assume the writer was trying to make was that those who want to invest in property will need to learn to make more frugal choices. Yes, the breakfast example may have been a poor one, but the author certainly has a point - and a good one at that. First time buyers are going to have to make sacrifices before, during and after they have bought a home and while they will most probably be able to afford the odd breakfast or lunch out, they are undoubtedly going to have to count every penny twice, at least until they’ve saved the deposit and properly budgeted for their bond repayments.