Written by Stefan Kostarelis
You would think that first-time buyers are mostly youngsters, but that isn’t necessarily true.
In Australia, where house prices are among the most expensive in the world, older people are also struggling to get a foot on the ladder.
Research from ING Direct in 2015 showed that the average of first home ownership is now the age of 37.7, up from 34.7 in 2005.
Housing prices vary from city to city, with Sydney right at the top.
In Sydney, which was recently ranked as the third least affordable housing market in the world, an average house will run you $852,000.
Adelaide comes in fourth place in Australia with an average price of $425,000 per dwelling, after Melbourne and Brisbane.
In addition, all major cities except for Perth and Darwin saw a rise in housing prices ranging from 3 – 15% in the last 12 months.
However, interest rates are at a record low and loans are competitive. So common sense would suggest that the best time to get a foot on the ladder is “now”.
It’s easier said than done though. Luckily, the good folks at
#1 Go in together
The idea here is simple – by buying a property with some friends or family you can pool your resources.
This means you can get that deposit saved more quickly, share up-front costs, borrow more and buy a better home.
It also means you can avoid paying mortgage insurance, provided that you can raise a 20% deposit.
There are a few things to be wary of in this situation.
For example, you need to consider what would happen if one of you wants to sell up or can’t make a repayment.
You’ll want to set up a watertight exit strategy that reduces risks and clearly stipulates the structure of the ownership.
#2 Buy an investment property
Traditionally, investment properties were something that people turned to later in life.
However, buying and then renting out an investment property has become an increasingly attractive way for younger Australians to get onto the ladder.
One of the first advantages to this is that if you are still living with your parents, then you can continue to do so while your mortgage is being paid off by tenants.
If the income generated by your investment property is greater than your loan repayments and other costs, then you’ll also be receiving a boost to your cash flow.
On the other hand, if the income generated is less, then you are running the investment property at a loss.
On the plus side, that loss will reduce your taxes. Some people choose to ride that loss and balance it against the value of the property going up.
It’s called negative gearing, and it can be a risky strategy.
To make an investment property work, you will need to buy in the right area, shop around for the best loan and get the right type of loan.
If you are considering an investment property in SA, then the city suburbs stand out.
Greg Harris, general manager of NAB Retail told Your Investment Property that Mile End is a top prospect because it is just 2km from the CBD, is close to the beach and has good transportation.
Meanwhile, Norwood remains the state’s most popular suburb with demand rising to the point where supply cannot keep up.
According to the same report, another suburb to watch is Rostrevor.
Median house prices there have rise 7.7 percent and it benefits from having a close proximity to the city, good transportation and several good schools.
#3 Invest in indirect property
The property market isn’t just about bricks and mortar.
You can also invest in commercial or real estate property though your super or a managed fund.
Such an investment may generate regular income and comes without the hassle and expense of maintaining a home.
For more information on how the Financial Advice Center can help you realize your property dreams, call 08 8332 4411 or email email@example.com
Mark Butters is an Authorised Representative and Credit Representative and SSFS Pty Ltd (ACN 100 654 733) trading as ‘Financial Advice Centre’ is an Authorised Representative of Charter Financial Planning Limited Australian Financial Services Licensee and Australian Credit Representative 234 665
The above article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
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