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Could avocado prices really be keeping millennials out of the Perth property market?

October 10, 2017

Smashed Avocado keeping you out of the property market? What if you bought an avocado farm instead?

Recent comments from an Australian property millionaire claiming that smashed avocado was the reason many millennials had failed to enter the property market. Lazy millennials who want everything for nothing, afraid of hard work and changing priorities, death of the Australian dream. It seems you cannot have your avocado and eat it too.

Financial adviser UBS released stats earlier this year claiming it would take first home buyers 11 years to save a 10 per cent deposit for a $400,000 home assuming an average annual income of $80,000 per year and five per cent savings rate.

Now assuming the cost of smashed avocado is $15 each that equates to around 267 smashed avocado breakfasts per year or five out of every seven days eating smashed avocado. Throw into the mix the compulsory additive costs of almond milk turmeric lattes and that 11 years quickly become 15. Avocado prices are growing more than 3 per cent per year as compared with house prices and income as used in the above comparison.

Let’s take a step back and become conspiracy theorists for the moment and trend the retail value of avocado sales over the past three years and compare that with the fall in the average median house price in Perth.

With median house prices trending down over the past three years, avocado prices and sales have continued to rise, growing by 20 per cent in the previous financial year to $920 million. Is it an elaborate scheme to keep millennials out of the property market altogether? Perhaps there is some merit to the property tycoon’s madness.

But what if I could kill two birds with the one stone (avocado of course). Purchase an avocado farm, sell the avocados and eat the creamy, smashed profits.

A quick search of avocado farms for sale yielded a small range of options mostly located in Queensland. The most attractive being for $875,000. I could purchase a mango and avocado farm, farming equipment, two homes with river frontage all set on 115 acres.

Going on an average of 100 trees per hectare, I could quite easily fit 10000 avocado trees on the property. At a low average of 100 avocados per tree per year, I am talking 1 million avocados every year, in a perfect season. If only it were that easy!

All this talk of avocados has got me thinking though, what are the priorities of millennials and the generations to follow? Study hard, get a job, buy a house and having a family are all noble pursuits but are not the be all and end all.

Where does travel sit in all of this? In fact, travel is one of the largest reasons millennials have elected not to enter the property market. It’s the prioritisation of worldly pursuits over home stability.

Perhaps a more relevant comparison might be the reduction in the cost of international airfares compared with property prices. Could it be that the accessibility of international travel and not smashed avocado, that is keeping millennials out of the property market?

“But what if I could kill two birds with the one stone (avocado of course). Purchase an avocado farm, sell the avocados and eat the creamy, smashed profits.”

And what about the nature of work? Never has the world been more mobile than today. The face of work as we know it is changing, the concept of working a 9-5 in an office is dying and millennials are seeing the flaws in a system that was designed to protect the system.

Rather than trying to save 10 times as much by not enjoying travel and smashed avocado, some more adventurous millennials are pursuing their working careers in bursts and taking mini-retirements from their working lives.

I see their reasoning though, if we are now expected to work into our 70s, it’s an awfully long time to wait to experience freedom of retirement.

The priorities for millennials and beyond have changed and will continue to do so. It’s not that they are spending too much on smashed avocado to pursue home ownership, it is that they are preoccupied with other goals.

Homeownership still remains an innate need it is just being pushed back to climb other mountains.

And when these generations are ready, you can be sure the way in which property is transacted will be completely different to the way it is exchanged today.

Like all industries, real estate is set for a new wave of disruption. The ironic thing is, it will most likely be millennials, eating their smashed avocados who drive this change.

Originally published on smh.com.au as ‘Could avocado prices really be keeping millennials out of the Perth property market?‘.

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