How to deal with affordability issues
The price of owning a property seems like too much, we know. The Housing Industry Association's September 2015 report on affordability actually shows that on a national scale, it's become more difficult to purchase a home – although to varying degrees depending on where you are
Buying new investment real estate in Queensland might not be as expensive as in New South Wales or Victoria, but there are still challenges to your strategy when buying in the Sunshine State. However, with the right property coaching and a little bit of big-picture thinking, affordability issues might not be the problem they once seemed to be.
Don't fear the deposit
"The actual amount of time it takes to save hasn't changed drastically"
According to the BankWest First Time Buyer Deposit report for June 2015, a couple would need $89,500 to put forward 20 per cent of a Queensland house's value for a home loan. Based on an average salary, this would take 3.9 years to put together – the same length as it would in 2010.
So while prices fluctuate, factors like income and interest rates mean that the actual amount of time it takes to save hasn't changed drastically. On top of this, there are a lot of shortcuts you can take to reaching a deposit. This includes:
- Government grants (especially when buying new properties)
- Leveraging equity from an existing piece of real estate if it's not your first home
- Securing guarantors on a mortgage
By developing a sound property investment strategy and employing various techniques to secure your deposit, getting another foothold on the ladder can be relatively simple.
The longer you wait, the harder it might get
Generally, property cycles get higher and higher every time around. For example, median house price figures from realestate.com.au show that in 2006, you'd pay $600,000 for a property in the centre of Brisbane. During the next peak in 2009, this was $640,000. And in 2013, this was $720,000.
You see the trend – anyone who bought the last time the market peaked definitely experienced a dip in prices as the cycle turned, but when prices rose again they went up higher than they had before. That's the beauty of property investment – in the long term, capital gains are likely to come knocking.
This isn't to say you should ignore affordability – it's a concern for many house hunters. However, get the right property coaching, and learn how to make financial tools like equity work in your favour. It can see you beat the affordability barrier and generate you some handsome returns.