Following the recent release of Australian Bureau of Statistics data, it is clear that there is a distinct lack of first home buyers being able to make their way onto the market in recent years. The proportion of young Aussies applying for finance for their first home loan has dropped to its lowest figures in two decades, falling in what the Real Estate Institute of Australia President Neville Sanders describes as a “downward spiral”. This has resulted in more and more people living at home with their parents for longer periods of time and or getting tied up in the rental cycle.
Owning your own home is a part of the Australian dream, and it seems a shame to let it slip past the younger generation that will inherit the future of the nation. Getting off the rental cycle or being able to leave your family home supported by your parents can come with a few sacrifices.
Here are just a few ideas that might help those struggling first home buyers out there.
LOOK FURTHER THAN YOUR BACKYARD
With the rising trend of teleworking or being able to work from a home base, the regional areas are becoming much more popular.
One of the largest barriers to home ownership is the dizzying heights that many places in Australasia have reached. It doesn’t matter if you’re from Brisbane or a Sydneysider – at the moment, we’re all in a similar property market: High values in capital cities, which have pushed many first home buyers (and even some families) out into the regional cities.
However, this is not necessarily a bad thing. The capital cities tend to offer better work opportunities and a shorter commute, but with the rising trend of flexible working arrangements, the regional areas have also performed well over time. In fact, one CoreLogic RP Data study from April found that there has been somewhat of a renaissance of young families heading out to coastal and lifestyle markets, where properties are more in their price range. It might be time for you to consider joining them.
CONSIDER AN INVESTMENT PROPERTY FIRST
Property has a habit of growing in value quite quickly in the modern market.
It may seem like an odd suggestion to make, as property investment is traditionally one of those things you consider after you’ve bought your first home. However, with low interest rates, different government grants and plenty of new housing developments on the go, we aren’t exactly currently living in a strictly traditional market any more. It’s time to innovate, and think outside the box.
As Bob Dylan says, “the times, they are a-changin”, but there is one consistent trend: property has a history of growing in value over time. Even places with a cheaper buy-in like Hobart have seen over 6 per cent year-on-year median value gains, according to CoreLogic data – that’s a better rate of return than you would get in most savings accounts!
This suggests that it might be a good idea to get on board with the recent “rentvesting” trend – buying an investment property in an affordable area while also renting yourself in the cities, closer to work. You supplement your mortgage repayments and your rental income with the investment property, while also maintaining your lifestyle; all the while accruing capital gains.
LOOK AT BUYING WITH OTHERS
Buying a home with another person can be a good strategy.
Let’s face it – you aren’t going to be the only one struggling with this issue. There are plenty of young Australians out there who are trying to get onto the property market for one reason or another. It’s widely known that the lack of capital to put a first deposit together is the major reason holding a large amount of people back from making this buying decision. Well, that and the overseas holiday that we would all want.
It can be said that unless you and this person start of the same page and are expecting the same results, this can be a risky choice, especially if you don’t know the person extremely well. All things being equal buying a home with another person can be a good strategy to get yourself started.
Ultimately, buying your first home is a great way to build equity, a good credit score and work your way towards a strong financial position. It can feel like a deeply personal choice, but in reality it should be as much a logical financial decision as well. Keep these tips in mind, and you might find that buying your first home becomes that much easier.
If you would like to know more about how much you can potentially borrow for your dream home please Contact Us and we will have one of our home loan specialists contact you for an obligation free discussion about what great home loan deals there are on the market currently.