New research this week has suggested that professional property valuers believe that Australian property prices will continue to soar despite home ownership being out of reach to many already.
I purchased my first property for $86,000 in my early 20s when interest rates were just below 20%. Little did I know that that decision would be the first step of a successful property portfolio. However, this new research had me thinking, what does this mean for people not in the market at all?
Let’s face the hard truth. The “Real Australian Dream” as we know it is dead. Buying a home in your dream suburb on a ¼ acre block is just not realistic unless of course you are fortunate enough to be supported by the bank of “mum and dad”.
With that being said, I believe homeownership is still well and truly achievable however the mechanics and mindset required have changed substantially since the “good old days “.
Quite often I get asked “How can I possibly afford a house when it’s so expensive around the city?” The simple answer is “you don’t “.
Prospective purchasers need to change their mindset to that of an investor. My solution is this;
Buy in an affordable area, rent to live in a desirable location. If metro prices are out of reach, invest in regional locations. This is commonly known as rentvesting.
A quarter of first home buyers take up to 10 years to save the required deposit to purchase their first home. In the meantime, prices continue to increase.
Using very modest predictions. If your dream home in today’s market is worth $600,000 and using a very modest annual capital rate of growth of 5%. That same home in 10 years is just under $1million to purchase.
The question for you now is can you afford not to buy property in this market?
By Matt Bower