Think the ‘Great Australian Dream’ of owning a home is out of reach? Think again…
The ‘Great Australian Dream’ for many Aussies is to eventually own their own patch of bricks and mortar.
In recent years, the prospect of home ownership has shifted from ‘future goal’ to a ‘pipe-dream’ but with the 2020/2021 HomeBuilders Grant, more than 137,000 Australians received up to $25,000 in cash to contribute to building their new home. Now with the stimulus winding up, and prices having risen over 22% in the past 12 months, home ownership may have slipped out of reach for many people.
Or has it?
It’s clear that property prices have surged to outrageously high prices in some cities and suburbs. And, I’m not going to pretend that buying a home when the average property price is 7 or 8 times the average annual salary is easy.
What I am going to do is show you that the road is not blocked – and that the path to owning your own home in some way, shape or form (as an owner occupier or as a rentvestor) is still very viable.
The reason is that there are many different ways you can get into real estate, and we help people from all walks of life go from feeling despondent and disheartened about their property options, to realising that there is a way forward (or at the very least, some clearer targets to aim for).
The great Australian dream is still strong…
It just might look a little different to what you expected.
January is a natural time for you to look at your goals, wants and desires. If buying a home or investment has been a goal of yours for a while and you want to know what’s actually possible for you, I strongly urge you to start thinking about what your next step could be?
With property values as high as they are, it may seem like owning a property is simply not in the cards at all. But have you considered…
- Buying a property in another suburb or city, looking at regional markets where your dollar goes a lot further?
- Becoming a rentvestor, where the tenant and the government’s tax breaks pay the property off for you, while you continue to rent in the area you enjoy living in?
- Expanding your search to another state? You can buy a property in Queensland, South Australia or Tasmania for half the price you’d pay in Sydney or Melbourne?
There are lots of different options, even delving into renovations and ways to add value to a property, but this also takes time, skill and money. The best way forward is to work out which options are right for you, and suit your immediate cashflow, budget and situation, but that also help you work towards your long-term goals. If the ideal scenario is a big stretch or unaffordable right now, think of what “stepping stones” you can take to get you closer to your dream.
With property, a long-term view is critical
The reason I mentioned long-term goals is because many people can get caught up looking at their immediate circumstances. Property is a large asset requiring a significant amount of money (deposit and/or loan) that will potentially become a part of your life for several years.
Consider it this way: let’s say you and your partner each saved up $40,000 each, so you had $80,000 in savings 5 years ago.
- You used that as a deposit to buy a property in another more affordable area. You didn’t live in the home; instead, you rented it out.
- You paid $500,000 for the home, with a loan of $440,000 ($60,000 was a deposit; the other $20,000 went towards buying costs, like stamp duty and legal fees).
- Over the last 5 years, the property market has surged. That property is now worth $630,000. Better still, the mortgage has been paid down to $400,000.
You would now have access to $130,000 in profit, with $230,000 in equity. If it’s viable, investors might keep this property, refinance the loan to access a big chunk of that equity, and use it as a deposit on another home.
Even if the market stalls and only grows moderately, the average property cycle take 7-10 years to double in value, so regardless of the ebb and flow of values, property investments take time to mature.
What’s most important is that you have been able to get your foot in the market. It’s better to be in the market and waiting so you are on the receiving end of growth… than waiting and waiting to enter what you might perceive to be the perfect market.
The exact path forward would depend on your income, circumstances, goals and risk profile. But my point is: you would have options. And the dream of owning a home would stop being that – a dream – and step closer towards becoming a reality.
The team at Active Property Investing does this day-in, day-out: we help people look at and adjust their immediate goals, and provide options for them to invest in more affordable property as a stepping stone. This helps you get your foot into the property market first and is a strategy that allows you to build wealth so you can eventually buy that dream home.
If you’d like to make 2022 the year that you finally get into the property market, contact our friendly team today so we can help you work out just what’s possible, and what you can make happen in your life this year!