GROW up, get a job, buy a home, start a family.
This was, traditionally, how life played out, although not always in that order.
These days, however, one of the crucial elements in the above-listed ‘Great Australian Dream’ is becoming unreachable for many, as it’s now harder than ever for Aussies to buy their own home.
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Increasing house values, coupled with the axing of the First Homebuyers Grant and most lenders demanding a minimum 10% deposit, mean that many Australians are finding themselves unable buy a home.
In the last four years, figures from the Real Estate Institute of Australia show that the nation’s average median house price has increased, up from $518,600 in March 2010 to $605,500 in March 2014.
A 10% deposit on a $500,000 home is $50k – on $600,000, it’s $60k. Who has the funds to save up that much money, plus stamp duty, plus mortgage insurance and other buying costs?
Apparently, not too many of us.
Australia’s biggest mortgage broker, Australian Finance Group, says just 9.5% of the loans they processed in the month of August were for first homebuyers.
If fewer than one in 10 home shoppers right now are newbies, what’s a first homebuyer to do, then?
Well, I reckon there are two possible solutions. Neither suggestion is usually popular with the first homebuyer set, but they do work.
The first option is to lower your expectations. When I bought my first home 10 years ago, it was a pretty basic townhouse with besser brick walls, cheap carpet, two small bedrooms and a 30-year-old bathroom. It wasn’t my dream home by any stretch, but it was a great starter home and I have loads of great memories from that time.
My parents had the same situation a generation ago: their first home was a tiny two-bedroom cottage, into which they squeezed themselves, two toddlers and a cockerspaniel.
So that’s option one. Downgrade and get on with it.
The second option is to keep renting a lovely home, and then buy a cheaper investment property – it could even be an apartment or unit in a town or state outside of the Gold Coast, depending on your budget. That way you can live in the home you want in the area you like, but you still have your foot on the property ladder.
Two valid options, the way I see it. And it means the Great Australian Dream is still possible – it just may look a little different to what you expected.
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