Younger Australians may be looking at riskier investments such as cryptocurrency in an effort to speed their entry into home ownership.
New research by Glow from the Catalyst program shows that younger Australians are more than twice as likely to invest in cryptocurrency over the next 12 months compared to the overall population. And the Catalyst survey also shows that affordability of housing is a key issue of concern to Australians, ranking as the fifth most pressing social or environmental issue from over 30 measured.
This research builds on recent data released in June 2021 by YouGov and cryptocurrency exchange Kraken,which showed a similar appetite for crypto investments amongst younger Australians.
Glow Founder and CEO Tim Clover said that many younger Australians had more disposable income than ever before brought about by the by-product of lockdowns – no travel and no going out to pubs, restaurants and concerts.
“They are living at home longer and savings in the bank are generating very little interest. The research shows they are looking at alternative investment vehicles such as cryptocurrency, although the 18 to 24-year-olds led every investment category that carried some risk including ETFs, NFTs, digital gold and micro investing.”
According to the Reserve Bank, it now takes, on average, nine years for a 24 to 35-year-old tucking away a fifth of their income each year to save for a typical home deposit in Sydney. That is up from five to six years a decade ago.
According to the ABC, property prices this year have risen faster than anytime over the past 32 years, so it is really no wonder that young people are taking greater risks in an attempt to fulfil the common Australian dream of owning their own home.
Cryptocurrency price volatilities however mean that young Australians are exposed to a high level of risk that may in fact delay their efforts to gain home ownership.
“Despite all the warnings and risks associated with cryptocurrency, these younger Australians may be figuring the risk is worth the potential reward,” Mr Clover said.
“To their credit, 21% also said they intended to invest in shares, which was up on the 15% of Australians overall.”
This growth in younger audiences tuning in to share trading aligns with other market data. Cath Whitaker, the CEO of low-cost ASX-listed share trading platform SelfWealth, said younger Australians were being attracted to the platform more so than any other age group.
“We saw it in 2020 with the number of younger Australians coming onto and trading on the SelfWealth platform in large numbers, now representing over 70% of the SelfWealth community.
“You can see why they are attracted to riskier investments such as cryptocurrency. Gen Z is more likely to invest in cryptocurrency believing that there is the potential for a huge upside and if it fails there is still plenty of time to recover their losses further down the track.”
Mr Clover said he didn’t know whether younger Australians were aware of the environmental impact of cryptocurrency. Bitcoin and Ethereum are often criticised for the energy they consume and their resultant carbon footprint.
“Our Catalyst research shows that younger audiences tend to over-index when it comes to concern for the environment, so it will be interesting to see if they lean towards the emerging greener cryptocurrencies such as BitGreen, SolarCoin, Cardano and Nano”.