Chris Childs


How much does property investment really cost?

Most of us are going to have to get into debt in order to create wealth for the long run. The Australian Prudential Regulatory Authority’s (APRA) property exposures report on the June quarter of 2015 showed that we have, as a country, borrowed a lot of money to buy investment property.

“People are champing at the bit to get on the property ladder”

In fact, as of March 31, APRA stated that lending for residential investment totalled $518.3 billion, which is nearly $20 billion more than the same time a year before. It goes to show that people are champing at the bit to get on the property ladder and start generating capital gains. But how much is it likely to cost you?

Brisbane nicely poised for your mortgage

QBE recently commissioned an Australian Housing Outlook 2015-2018 report, which has a lot of in-depth information about real estate across the country. One particularly important point for those interested in investment property in Queensland is how much of your income a mortgage is going to take up.

This is a sound indicator of whether maintaining an investment home loan will be a sustainable practice. In Brisbane, median mortgage repayments take up only 21.8 per cent of the median income. This is much more affordable than Sydney and Melbourne, where price rises have hampered affordability.

How much do you need to put aside for your investment?

In the coming three years this percentage is set to rise, so the near future might be a great time to secure a low home loan interest rate and move into property investment.

Don’t forget the deposit

While you may only have to pay a fifth of your income each month to maintain a home loan, there is still the matter of a deposit to get out of the way. The BankWest First Time Buyer Deposit report for 2015 states that in Queensland, couples aged 25-34 would need about 3.9 years to save for a deposit on the median priced home.

This may seem like a long time, but it’s actually one of the better results in the country. On top of this, it doesn’t factor in other ways to get ahead with your property investment strategy. With a wide array of home loans available wherever you are and wealth creation strategies much more diverse than simply buying a first home, it can be even easier to get ahead financially.

When it comes to investment property, the short term costs and debt can be considered forward planning. Real estate is a long term strategy – talk to us at Think Money about how it can benefit you.