My work focuses on personal finance. A large part of personal finance is trying to contextualise the decisions that we make.

We have been recording our podcast Investing Compass for over three years now. Listeners have gotten to know parts of our lives, and the motivations behind the decisions that we’ve made when it comes to our financial goals and habits. We always make sure that our personal views come with an important caveat. Explaining what Mark and I do with our finances does not mean anyone else should do the same thing. The thought process is more important than the outcome and we both feel that the biggest mistake that people make is not spending time thinking about what they want out of life and how their financial decisions and assets can support that life.

Long time listeners to Investing Compass have, rightfully so, questioned why I changed my stance from 2021 where I stated that I was not interested in buying property. I then went and…purchased a property. This is why I changed my mind.

The opportunity cost

Buying a house was a financial goal that I never thought was realistic for me. Not to say that I would never have the means to purchase a home, but I would not have the means to purchase a house in an area that I would like to live in and that I would be comfortable in while achieving my other financial goals that were much more important to me.

The sacrifices I believed were necessary to buy a house that I wanted meant I wouldn’t be living the life I wanted.

Adding to this was my experience living in rental properties. Repairs would come in that would require a small fortune to get fixed. I was always thankful that I was not responsible for the repairs and knew that it would be a constant source of financial anxiety.

For investment properties there is negative gearing and deductible expenses. However, the ATO doesn’t receive a copy of your invoice and pay their part. These are upfront costs that on a single income I would feel uncomfortable managing. With your primary place of residence, there’s no deductions and you’re fronting that whole cost. I didn’t want to put myself into financial stress.

The argument is always that younger people should sacrifice on location, or size, or wants or needs to get their foot on the property ladder. This never made sense to me. I spent a lot of my early adult years living far away from work and university. There were some days that I would travel 7 hours, but on average, it was three hours a day. I had no time to spend time with my family or friends, I was constantly exhausted and it impacted my career.

If I was going to purchase a house, I wasn’t just going to purchase a house to get on the property ladder and sacrifice my lifestyle. Especially because I was and am very comfortable with investing through equity and fixed income markets, including investing in real estate through listed vehicles.

These are all personal decisions. There are many people that have decided that a house is more important. Financial goals are all individual to us – that’s why it’s called personal finance.

In my case, I was comfortable investing for my financial goals through other asset classes and happy with renting (or as happy as you can be). I have structured my finances around saving for other financial goals, including travel.

Why I changed my mind

Ultimately what changed my mind was getting married. It has never been my goal to own or purchase a property given the opportunity costs, but it has always been one of my husband’s goals.

Ironically, we met because I couldn’t afford to rent a place in Sydney by myself and he was renting out a room in a share house. My husband Matt grew up in Port Macquarie where his family owned a small residential property development company. He has grown up in an environment that has constantly shown the rewards of owning residential property. We made a decision together to purchase a home because it was something that he has always wanted to do. When you marry someone, sometimes you do things to make them happy!

Our perspective on housing is key. For us, it was an emotional goal. All these terms about housing gets thrown around – there’s updates on how the housing market has performed each month, constant discussion of annual returns, how many years it takes for your house to double in value. That is noise for a lot of homeowners that have no intention of perceiving their home as an investment.

How it worked for me

We sat down and talked about what was important to us in a house. There were non-negotiables and the things that we were willing to bend a little on. My non-negotiables were that I wanted to keep investing and saving for my other financial goals including retirement and travel. I didn’t perceive this house as an investment, so it was important that my cashflow wasn’t impacted so severely that I was not able to continue saving for my financial goals.

I knew that once we started the process of looking for a home, emotions can take over which causes people to compromise on what they are willing to accept and what they are willing to pay. I wanted to go into the process with clear, agreed upon boundaries.

There were several important changes in terms of the opportunity cost that initially meant I didn’t want to consider purchasing a home. The first was that when we got married, we became a dual income household with no dependents, and no plan to have dependents. We had double the savings and double the income. This meant that those extra costs – emergency repairs, those expected or planned expenses with owning property – these weren’t going to be the huge burden that it would’ve been on a single income.

Another non-negotiable was bolstering the emergency fund. We have enough saved for both of us to be out of work for 6 months that sits in the offset. The last thing that you want is to achieve a financial goal that brings on financial stress at the same time. This gives me peace of mind.

My other non-negotiable was location. As I mentioned, it was important to me because I’ve seen how it impacts your lifestyle when you live away from friends, family and places that are important to your lifestyle. I also really enjoy walking to work, so I wanted to live close enough to work that I was able to walk to work in less than an hour.

A home, and not an investment

That perception of housing as an investment, even if it is your residence, is based on the past experience of Aussie homeowners. They’ve made eye watering returns, solely from purchasing a family home. It has turned from an emotional goal to have a family home to becoming an investment, or a way to fund their retirement, or other financial goals.

The house that we purchased was not an investment. We haven’t gone into this with the mentality that we need to buy the most optimal residential property to reap future returns. It is a home.

There are many ways to defining an investment. It could be that it has positive cashflows or selling it at a gain to pay for something in the future. The reason we save and invest is to fund future expenses. I can tell you right now that a house does not have positive cashflows, and our decision-making process did not involve comparing houses based on potential capital gains in the future.

Ultimately, it is a place that we bought because we wanted to create a home. This is the perspective of many people that have purchased a home or have been locked out of the housing market because of how expensive it is to own property in Australia. Especially in capital cities like Sydney and Melbourne. Just like going on an expensive holiday or buying a car- when you get out of the mindset that it is an investment or a utility to provide shelter, you’re spending money on something that brings you joy. Not everything needs to be a wealth maximising exercise. I don’t think that is the way to live your life. Buying a home means a bit more permanency. We purchased furniture that we liked, we hung photos of our family on the wall and we put in light fixtures. We did this for us to create a space we wanted to spend time in. I love spending time at home so it was nice to feel like I was in a place where I could really settle.

The purchase of our home was a financial goal. Not an investment to get to a future financial goal. It is something that is individual to each of us and a home should be something that brings joy, peace of mind, and security.

I am aware that the headline of this article can be perceived as tone deaf. A lot of people do not have the opportunity to ‘decide’ to purchase a home. I acknowledge that my position as a first home buyer isn’t common. It isn’t common to be able to get a buyer’s agent who makes the process easier to purchase a home. It’s not common to have dual incomes and no dependents. It is no longer possible in Sydney to forego stamp duty if you’re purchasing at the median house price and pay land tax instead.

I feel for a lot of renters that are looking to purchase for that sense of stability and security, and not just to say that they’ve gotten their foot on the property ladder. There’s nothing wrong with wanting to do that, but that requires a completely different perspective and assessment of negotiables and non-negotiables. That is more around assessing the value of the property as an investment, the cashflows it generates and the black and white financial costs, more than how it fulfils an emotional need. My interview with Kitty Parker outlines what should be included in your assessment here.

Buying a home gives me peace of mind and a sense of stability. I never thought that I could afford a home without having to sacrificing my other financial goals. The only way that I was able to do this was through a dual income household with two comfortable salaries. More Australians should be able to experience this without sacrificing their other financial goals or a comfortable lifestyle. Alan Kohler’s Quarterly Essay is an insightful read with evidence-backed solutions on how the system must adapt to make this achievable for more Australians.

Further resources:

I have written about the costs of purchasing my first home here.

If you are looking for an investment property, I have interviewed award winning Buyers Agent Kitty Parker about what to look for.