Home ownership a status symbol?
By 07 November 2011
Prior to the GFC, debt was everybody’s friend. Many Australians viewed it as a part of life, both inevitable and necessary. Indeed, being in debt – if it was productive and under control – was often seen as a mark of success.
While the GFC may have encouraged consumers to be more wary of debt, research from RAMS Home Loans reveals that consumers are still comfortable taking on debt to get ahead, reach their goals and improve their social standing.
Their ‘Why we buy’ report, compiled in conjunction with leading research organisation IPSOS, explores the Australian desire for property ownership and provides insights into the social and emotional factors that make property ownership so important to Australians.
It says that debt no longer carries the social stigma of yesteryear; with consumers realising that debt can be a useful means to an end.
Many years ago, inflexible home loans and frowning bank managers combined to create high levels of anxiety – even fear – among borrowers. Fortunately these feelings have largely dissipated, although consumers are quick to differentiate between ‘bad debt’ and ‘good debt’.
Bad debt is seen as unnecessary because it’s the result of over-spending. It’s typified by credit card debt, but can also be created by over-borrowing or over-capitalising on property.
Good debt, on the other hand, has a worthwhile purpose and is epitomised by a mortgage on your own home or an investment property.
Overwhelmingly, Australians see home ownership as the essential foundation of a successful life and are happy to take on debt to achieve their goal.
For many Australians in their mid-to-late 20s, home ownership is often associated with a certain degree of social success. If they see their peers getting ahead financially and going through the process of buying homes, the pressure to enter the property market can be very strong.
The research revealed that marriage, property and children were still the uncontested desires of young Australians, but buying a house as soon as possible was seen to be the smartest move.
Nick Bateup Head of Product, RAMS