Much has been said and written in recent times about housing affordability and whether most young Australians will ever be able to afford to buy their own homes. This debate follows a period of exponential growth in Australian house prices, especially within the eastern states of Melbourne and Sydney.
These concerns tend to be overstated and can often result in poor decisions being made by those who develop what we call “a fear of missing out”.
How often have you overheard the comment “at least you’re in the market” being uttered to a young new property owner? This is usually code for “well, it’s not the greatest property but at least you’ve made a start”.
Yes, everyone does need to make a start at some time but a decision to purchase must be based on sound principles that will deliver strong financial reward. Your first property purchase that can set you up for the future and provide a springboard for bigger and better things to come in later life. It is important therefore that you get it right.
And so what do you need to achieve your goal of owning a property?
Sure, money rates highly…but so too does patience.
In the current climate, if you are short of the required funds to purchase a property that will deliver strong capital gain in the future, the best strategy is to wait, save more and buy when the time is right. There is simply no point in purchasing a property that has limited upside, all for the sake of “being in the market”. There can be far better ways to invest while you accumulate a larger deposit.
It must be remembered that the on-costs associated with buying a property are considerable. In a slower market they can take a long time to recoup before you begin to see a profit on your investment. Stamp duty and legal fees alone can amount to in excess of 5% of the purchase price. Remember also that if it is an investment property you have purchased and not a home for your personal occupation, capital gains tax will be payable at the time you sell. This is an additional cost that will further reduce your end profit.
Sound property investment involves ticking all the boxes. Location, condition, scope for further improvement, public transport proximity and potential for strong capital gain are some of the many considerations that need to be taken into account. So too are demand and supply factors, especially if you are contemplating the purchase of an apartment.
Ticking all the boxes comes at a cost and if you can’t achieve it within your current budget…wait, be patient, the time will come.
In determining your financial capacity to purchase the “right” property, there are a number of strategies you may also wish to consider:
If you are purchasing a property for your personal occupation, you may think about sharing the property in order to defray the cost of the mortgage payments. This can also be a great way to build equity in your investment.
If you do not wish to share the property, think about deferring occupation for a period of time by installing tenants for a year or two.
Whether for personal occupation or investment, co-ownership with a family member or friend could also be considered. This can be tricky but providing you have proper agreements in place to cover changes of circumstances, this can be an excellent way of buying a quality property and accelerating your property ambitions.
There are many ways of entering the property market and you can be assured of success providing you are smart in the way you go about it. Understand what you are doing, take advice and protect both your legal and financial position. And yes, exercise patience.
For other property related articles by Bidpro, please visit our Resource Centre at
If you would like to learn more about the services we offer, please contact Shane Heffernan
0418 511 390