When it comes to the housing market in Australia today, it's easy to get disheartened: the media message seems to be that high house prices are locking out the new generation of buyers. But is it really the market that is to blame?
Undoubtedly, real house prices versus real incomes are higher today than they were 30 years ago, leading to the conclusion that the 'Australian dream' of home ownership is under threat. But is it unrealistically high expectations that are in fact threatening that dream?
An argument might be mounted that, in those past 30 years, living standards have risen to the point that Generations Y and Z are reluctant to plan for anything other than perfection. If they were to ask their parents about their first home, they would be told they started life in the property market at the bottom. The same applies today: a 'good first home' is not perfect, it is one that "has potential".
A generation expecting a first home that is affordable and perfect at the same time is just being unrealistic.
Understand that it is step one on your housing market adventure - you will not live in it forever!
Depending on your needs and lifestyle, you might not have the time, skills or available cash to take on a renovator. While TV shows like The Block have boosted the Australian spirit to renovate, it’s not always possible if you’ve used up all your cash for the deposit. However, if you are buying a renovator it’s important to talk to a mortgage broker like Mint Equity who can discuss lending possibilities prior to your purchase so you can ensure you have cash left over for the renovations.
If a property with ‘good bones’ isn’t your cup of tea, then compromises need to be made. Size, finishes, layout and personal taste should be considered as areas of compromise for realistic buyers. Buyers should list the core elements that they want in a property, then consider all options. For example, brand new apartments are stunning with modern finishes but are a lot smaller than older apartments and often have much higher strata costs.
Let’s face it, nobody loves the look of a 1960’s red-brick apartment complex but these can provide an easier entry point for first time buyers.
Consider all locations
Getting into the housing market can be as simple as adjusting expectations, and getting more realistic. Buyers should not go on their open-inspection tour knowing exactly what they want - have an open mind. The outer suburbs of Sydney, for instance, did not just pop up overnight: for those seeking the perfect location, these cheaper, outer areas should not be ruled out on the basis of inconvenience, but in fact seen as a springboard to something else in the future. Some government departments are offering grants or discounts for affordable house and land packages in less central locations, while some developers are giving first home buyers first dibs on the best packages. Building from scratch also provides the sorts of community infrastructure that is so attractive about the inner areas.
'Looking on the bright side' might be too simplistic, but the new generation of home buyers have plenty of reasons to be optimistic about delaying perfection and getting into the housing market today. Houses should be viewed for their improvement potential and the rising value of local sale prices, and, while the location might be a little further from inner Sydney than desired, that can be mitigated by good public transport infrastructure, reasonable commuting distance for work and family-friendly neighbourhoods with good schools and parks. Developers are catching on to the aspirational generation of buyers and creating estates with homes or apartments that may be smaller but are glimmering and modern inside, with features like polished floorboards that mirror their more expensive counterparts.
Know your financial limits
Knowing your borrowing capacity before going house hunting will alleviate stress when it comes time to make an offer. Mint Equity has helped many first home buyers secure finance and their dream home through clever financing and looking at all available the options.