The housing affordability debate continues, with Victorian State Government announcing an increased first home-buyers grant for regional areas, and further stamp duty incentives. (Read more here). Interestingly the blame for the affordability issues seem to be shared equally between current homeowners, property investors, and foreign buyers.
This is why it isn’t fair.
Homeowners who purchased 30+ years ago had lower house prices with respect to their wages, but they still had to scrimp and save to put together a 20% deposit (not 5%), and pay off a mortgage that at times exceeded 15% p.a.
Investors are portrayed as selfish tax evading fat-cats making a motza from their extensive portfolios. However in Australia 85% of property investors only have one investment property, which was purchased to supplement their superannuation. Surely such investments should be encouraged, not jeopardised. Otherwise the burden of paying additional pensions could very well be shifted to the young people of today.
Foreigners can only buy new property, and developers generally accept a maximum of 15% foreign buyers. Surely this is not enough to over-heat the property market, yet foreign investors are often blamed for Australia’s housing issues.
Some advise to first home-buyers that will actually help you get your foot in the property door.
1. There are affordable properties out there. But you will pay more than you want to, and the mortgage will cost you more per week than you want to spend. This is a common problem amongst all generations, including your parents.
2. Your first home may not be in a suburb you want to spend the rest of your life. And that is okay. However it will get you onto the property ladder – and that is a much safer place to be than not on it. Consider if rentvesting is for you. Read this article.
3. Know your stuff! There are discounts available and stamp duty concessions for eligible first home buyers.
4. No excuses, just get started! It is all too easy to blame current homeowners, investors and foreigner buyers for the current market conditions but that will not get you in the property market. The first and easiest step you can make is getting started. We are now in a time of generational low interest rates. Act now.
You can call me on 0409 02 99 22 or send me an email.