It won’t come as a huge surprise to learn that Australian homes are among the most expensive in the world. In a recent surveyi every Australian town and suburb was rated as ‘seriously’ or ‘severely’ unaffordable. And if you’re in a capital city it’s even worse, with the average Sydney home costing nine times average household income.
So it can be tough to put together a deposit, especially when you’re starting out. It’s a far cry from back in your parents’ day, when it seemed to be easier to achieve the great Australian dream of owning a home.
But while it’s easy to focus on the downside, there are reasons to be cheerful. Interest rates today are at record lows, compared with the 17% that your parents might have been paying off as recently as 1990.ii And credit is more readily available, with more competition among lenders.
So getting approval for a loan might be easier. But you still need to put a deposit together and cover the repayments. Here are three more creative ways to get your foot on the property ladder.
Buying a property with a bunch of mates or family can be a good way of pooling your resources.
But you need to go into a co-ownership arrangement with your eyes wide open. Think about what would happen if one of you wants to sell up or can’t make a repayment. Watertight legal commitments can reduce the risks if things go pear-shaped.
Back in the day, an investment property was something you turned your mind to later in life once you were firmly established in your family home. But renting out an investment property is an increasingly attractive way for younger Australians to get into the housing market while continuing to live with their parents or renting somewhere else cheaper.
You’ll need to make the finances work.
And you’ll need to do your homework.
Make sure your will is in order so that if anything happens to you, your share in the property will go to the people you want it to.
Bricks and mortar isn’t the only option. You can invest in commercial or residential property through your super or a managed fund to generate a regular income and potential capital growth without the hassle and expense of maintaining a home.
Property in Illawarra went through an interesting cycle in the recent years. It certainly created a lot of discussions and speculations. At Illawarra FP, we believe it’s crucial to focus on things we can actually control. This includes having your own roadmap and tracking your own progress.
Are you property ladder ready?
To find out how we can help you realise your property dreams, speak with us today - 02 4229 8533
i: 2014 Demographia Housing Affordability Survey - www.macrobusiness.com.au/2014/01/2014-demographia-housing-affordability-survey
ii: Reserve Bank of Australia - www.rba.gov.au/statistics/cash-rate/cash-rate-1990-1996.html
General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.