How to get on the property ladder
We’ve all heard it. Housing prices are skyrocketing – especially in the Sydney and Melbourne where media talk about ‘a house price bubble’ – people are being priced out of central suburbs, and if the younger generations ever want to buy a house? Good luck to them. Or as Treasurer Joe Hockey recently proclaimed: they should get a better job.
Property price growth in Australia has accelerated at a much faster rate than income growth. In 2000 the ratio of the two was three to one. Now, it’s over four to one. The good news (yes, there’s good news!) is that with the right focus, budgeting and research, getting a foot on the property ladder doesn’t have to be an insurmountable task.
Start by making small behaviour changes. Ideally, you’ll need to come up with a 20% deposit to get a home loan, plus an extra five per cent for purchasing costs. Over a few years, the extra savings will add up, and can multiply the amount you’re able to borrow.
Also start to think about where you’re going to buy. Location is important, but that’s not to say closer to the CBD is better. Do your research – both online and by going to open homes – and look at cheaper, up-and-coming suburbs with high infrastructure investment and capital growth potential. Access to schools and community facilities is important. If this is going to be a family home, you’ll want to give your children a good lifestyle while minimising unneeded financial stress.Want to work out how much you’ll need to save, and how long it will take you? Trial Map My Plan today and get guidance personalised to your situation.