With property prices reaching eye-watering highs across the country in 2016, the media over the past few weeks has been hyping the dire situation for first time buyers. But is it really that bad?
Leave it to the general media to see the downside. If I was considering buying my first property now, even I would be discouraged by continually reading these reports. Particularly that Bankwest report stating people needed to save for eight years to build a reasonable deposit.
This opens up the subtext argument about how hard it is to enter the property market now, as opposed to any time in the past. As someone who has built a property portfolio without the help of parental hand outs, from my perspective it is much easier now. You just need to know how.
I actually did it the hard way (of course). Due to my family situation, I moved out on my own just after I turned 16. My first rental property was a little bed-sitter in a converted house at Summer Hill (NSW). At that time exactly 33% of my money went on rent and the rest went on utilities, general life bills, food, plus nights out. I spent the lot every week because I didn’t know any better and had extremely poor cash control, as well as very little income to manage.
I remember thinking I would never be able to own a home of my own. I eventually took on two extra jobs over the top of my full time day job, and started to build up a little savings nest egg . . then blew a fair whack of it renovating a different (bigger = two bedrooms and a separate kitchen) rental property, buying a second hand car and a holiday.
As a property devotee, I really wanted to buy my own home, however I just didn’t believe I could ever afford to buy in Sydney. But what I was thinking was . . “I will never be able to afford to buy a house in Haberfield”. For those of you don’t know, Haberfield has always been one of the more expensive suburbs in Sydney. It is losing its crown a little now with WestConnex and a range of other issues impacting prices, but back when I was looking Haberfield was only for the well heeled.
Of course, if I had only looked a little closer to home – I was living at Five Dock by this time – and saved just a little more, I would have been able to enter the market years earlier than I eventually did. Back then, there were other obstacles including high unemployment, massive interest rates and single females were not all that successful in obtaining loans, so I had plenty of excuses for not even trying to figure out how to achieve my goal.
What I ended up doing was move to Brisbane (with a few years of a sideline living in Perth and Melbourne – always the long way to the goal . . ugh). Sure, part of my interest in Brisbane was the fact that every single girl in Sydney knew there was a better male / female ratio in any other city other than the one I was living in.
Other personal drivers aside, 50% of my incentive to move to Brisbane was because properties were about 75% cheaper than Sydney prices and I was not getting any younger. It all worked out though, as I finally found my entry into the property market and then kept going.
But there was plenty of other ways to enter the market. Some of my friends married extremely young – for example Buck and Garry – Buck was only 21. They couldn’t afford to buy near their parents – Buck was from Earlwood and Garry’s family was based at Bondi. What they did was buy an unloved little unit at Maroubra, which was considered to be a LONG way from the areas they wanted to live in.
Their property needed considerable work done to it, so they organized a series of working bees to polish it up and then they tricked, bribed and begged for as much help as they could get. Next, they focused and saved, and eventually traded up to their ‘forever home’ in Caringbah. Originally, Caringbah was planned as a stepping stone, but they ended up loving the area and are still there today . . 20+ years on.
Moving around and renovating was a very common theme ‘in our day’. People started to move further and further out of their original suburbs, spreading out to the Central Coast, Blue Mountains, Wollongong, or even changing States like me. The aim was to find something that matched your budget and your lifestyle, even if it wasn’t planned to be forever.
And it wasn’t only people from NSW doing this. My husband grew up in Brisbane (yes . .I found him in Brisbane as well as property : – )) and he has a similar story in the way he entered the market. He spent many weekends renovating houses with a multitude of friends and family – all with a view to finding a bargain purchase, then fixing it up. His first property was in a new ‘outlying’ suburb – now considered to be an inner suburb – and then he traded up until he could afford to move to his desired suburb.
But that was then. Now first time buyers have many more opportunities to get into the market, including the suggestions below.
The issue getting significant attention at the moment is saving for a deposit. The fact is, you do actually have to work at saving and building up a deposit. But there are ways to do this quicker as well.
If you are looking to enter the property market – no matter what your age – I hope you now have a more balanced idea of what might be possible. Two final tips –
Finally, believe it is possible and know it is definitely worth the effort to enter the market if you want to. Our property market is one of the more stable and successful markets in the world, and it will only stay that way if everyone that wants to is able to purchase property that meets their needs. Yes, there is some effort involved, but there’s plenty of people willing to help you make it happen.
Crave Property Advisory helps people buy property they crave. Using the MI System ©, we help our clients to confidently purchase property and build successful portfolios. As buyers agents and property strategists our services extend to home, investment and commercial purchases, including advice on adding value to maximise your purchase.
Debra Beck-Mewing has more than 20 years’ experience in property investing, Australia-wide. A licensed real estate agent, Debra also holds a Bachelor of Commerce and Master of Business. She has used a range of strategies to build her property portfolio including renovating, granny flats, sub dividing and development. Debra is skilled in identifying development opportunities, and sourcing properties that have multiple uses and multiple exit strategies.
Disclaimer – This information is of a general nature only and does not constitute professional advice. We strongly recommend you seek your own professional advice in relation to your particular circumstances.
Debra Beck-Mewing– Crave Property