Since first-time buyers are priced further away from the market, there is only one strategy left to buy, and they probably won’t like it.
Property prices in Australia are at record highs.
CoreLogic Data showed the value of australian owned rose by more than $1.1 trillion in just five months through the end of 2021, meaning it’s never been more expensive for first-time homebuyers to enter the market.
CoreLogic also found that the Australian property market rose 20.3% in the year to September 2021, which is the highest annual rate of appreciation since June 1989.
“Affordability is a growing challenge for many segments of the market, but particularly for first-time home buyers,” said CoreLogic’s head of research, Eliza Owen.
But given the strength of the Australian property market and the steady growth in property values, the longer first time buyers wait to enter the real estate market, the more challenging it will be.
It certainly takes a great deal of effort to make this happen, but anything is possible if you have the right approach.
Here, I break down the key things you can do to make your first property purchase faster and easier.
Be clear about your goal
Since your property deposit is likely to be a large number that requires you to do some work to put it together, it can seem almost impossible. Focusing the laser on exactly how much you need will give you a significant advantage, by establishing a clear target to aim for and a schedule to work towards.
There are a lot of different ways you can buy your property. You can spend (and borrow) at different levels, buy as a home or investment, leverage first time buyer concessions, or use a family guarantee. All the different options impact your money differently, both today and after your purchase.
Having a solid plan before you jump is the key to getting it right. Making the best property move for you really depends on what is most important to you.
Do you really want to own the property you live in, or is that a minor concern? Can you afford the type of property you would like to live in? Do you currently have cheap rent? And what are the things you want to do with your life, career and income in the next few years?
If you want to plan a smart property purchase, you need to think about not only whether the property you’re looking to buy will be a good investment, but also how it will fit in with your situation and the life you want to live.
Understand if using a family guarantee could work for you
This option is not one that will work for everyone, but using a family guarantee can help you get into the real estate market without saving a deposit. If this option is something you think might be possible for you, do your research and get good advice, then build it into your property plan.
Your savings plan and deposit schedule
I understand budgets they are boring, but knowing how much you want to spend and how much you have left over for your savings and property fund is crucial to making your property purchase really happen.
Having a good budget doesn’t necessarily mean making big sacrifices or counting every dollar you earn and spend. It simply means that you have discovered your ideal combination of priorities between spending on your day to day and saving money for your investment.
Once you’ve established your spending and saving priorities and have a clear goal for buying a property, you can put the two together to map out a timeline for building your property deposit and entering the market.
This will give you a huge motivational boost as you will be able to see that what you want to do is achievable and set clear expectations for when you will get there.
If after plotting your timeline it doesn’t quite fit into the time frame you want, don’t be discouraged: this is completely natural and just means you have a little more work to do. Go back to your spending and savings plan and see what you can change to modify your terms.
Pro Tip: Don’t fall into the trap of thinking you can only increase savings by cutting your expenses. Consider what you can do to increase your income, whether it’s improving your skills, pushing for a promotion or pay raise, or starting a side job.
Steps to your dream house
Understand that there may be steps to your dream home. Trying to save the deposit on your dream home in cash while property values rise can be like chasing a rainbow.
Entering the real estate market with a ‘springboard’ property can help you create a foothold in the real estate market and means that you have at least some property behind you. This way, if the market goes up, your springboard property will go up with it, meaning you’ll at least keep up with the growth.
You can then focus on building your other savings and investments to add to the property you already own, getting closer to the ultimate goal of buying your dream home.
Buying your first home is a big move and one of the most challenging financial undertakings most Australians will undertake. It can seem almost impossible, and as a result, it’s easy to fall into the trap of burying your head in the sand, putting it off for a tomorrow that never seems to come.
But it won’t happen by itself. She must put in the time, focus and work to get there. He follows the steps above so that his plan is concrete, realistic, and achievable; In this way, he will benefit from a motivational boost and will have more confidence to follow the path that will carry him through.
Ben Nash is an expert finance commentator, podcaster, financial advisor, and founder of pivot wealthand author of Amazon’s best-selling bookGet Unstuck: Your guide to creating a life that is not limited by money‘.
Ben just launched a series of free online financial education events to help you take financial initiative. You can reserve your place here.
Disclaimer: The information in this article is general in nature and does not take into account your personal goals, financial situation, or needs. Therefore, you should consider whether the information is appropriate for your circumstances before acting on it and, where appropriate, seek professional advice from a financial professional.