Housing is an essential product. Depending on who you ask, coffee is oftentimes grouped in the same category.
Australian housing is not getting any cheaper. The median house price in Perth has risen to $500,000. That median house price was only $157,000 only 20 years earlier, which is a 318% increase!
Now Perth’s housing market has lost some steam in the past decade. However, there is plenty of evidence to suggest a strong resurgence in the market. With this uptick, more Australians feel unable to afford housing in developed areas.
However, could the answer to the affordability question rest in one’s living preferences? Said differently, could your coffee habit determine whether you can afford a house?
Australia’s love for coffee
There may be some truth to the statement that Aussies can’t live without coffee…
Three out of four Australians have at least one coffee a day. Furthermore, the average Australian consumes 1.91 kilograms of coffee each year. That is roughly equivalent to 245 espresso shots! My heart’s racing just thinking about that volume.
Now let’s discuss how much all that coffee costs. Back in 2019, the average cost of a regular cappuccino in Perth was $4.63. If we assume the average person enjoys at least two coffees a day, and that person works a 5-day week, that would translate to an annual coffee budget of $2,200 – $2,400 (based on 48-52 working weeks).
Imagine, for a moment, spending over $20,000 on coffee in a decade!
This is not just about coffee…
I fully appreciate that $2,400 of saved coffee expenses is not enough for a home deposit. What I’m seeking to illustrate is the emphasis we place on consumerist ideals.
In an earlier post, I noted the average household expenses for Australians were $57,000. What I didn’t mention was that 17% (nearly $10,000) goes towards recreation, the second largest category only to food. Other discretionary items such as retail were also high on this list.
This underpins my view that we place too much importance on non-essential, discretionary items. Therefore, the question is not on housing affordability, but on what one chooses to be their lifestyle priorities.
I’ve mentioned numerous times that home ownership requires sacrifice of all types. That means mental, emotional, and certainly financial sacrifice. Now I’m not suggesting that you give up all life pleasures and live like a hermit! All I’m saying is that, if you’re unwilling to compromise on your current lifestyle, don’t seem surprised if home ownership continues to remain out of reach.
Living a frugal lifestyle in exchange for something better
Did you know that a kilogram bag of decent coffee costs anywhere between $30 – $40? That will get you roughly 125 cups, or $0.30 per coffee. Now before the coffee police get up in arms, let me just say that I was one of you once, and that you get used to it very quickly.
A common objection I receive to choosing cafe-brewed coffee over homemade is that you miss out on the experience. That escape from the regular grind (forgive the pun). Perhaps a chance to connect with friends or coworkers.
I am all for camaraderie and shared experiences. However, I’m not interested if it means a thinner wallet or a disappearing bank balance. I maintain that you can still enjoy these shared experiences without having to pay for it.
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Just one parting thought. Kicking the paid coffee habit is a gateway to improved financial practices. Once you stop paying for coffee, you begin to think about other discretionary items that you could perhaps do without. Suddenly, that home deposit doesn’t seem too far out of reach…
The content outlined above was written, edited and published by the Lost Realtor. The author has over 20 years or real estate sales and investing experience in the Australian property market. He has held senior positions in Australian building companies, including being the General Manager of the residential sales division of Collier Homes. His qualifications include a Bachelor of Commerce degree and a Graduate Diploma in Building and Construction Law.