With property prices in Sydney now reaching past the $1 million mark, first home buyers plummet to new record lows as affordability worsens and lending toughens.
So with less people able to purchase property and become homeowners, our rental population is quickly rising and 2017 has been earmarked as having more renters than those who actually own a property which is pretty scary.
Not owning a property can seriously affect your retirement plans
And it’s not just youngsters and young professionals who are having to continue to rent and being forced out of the property market, there are still rental tenants in their 40s who have yet to get on the property ladder. By not owning a property by the time you are 40 can seriously affect your retirement plans, allowing you to lead a less comfortable retirement in the future.
According to HILDA research, “if you haven’t achieved home ownership by the time you’re in your 40s, it’s unlikely you ever will”.
Renting is adequate for the short term, but by the time you want to start a family or retire, you want something more stable, and renting typically does not provide you with this stability. Generally, you can only get leases for six or 12 months and you have to face maintenance issues or rental increases which are out of your control. In a Westpac 2016 Home Ownership report, 65 per cent of respondents want to own a home for stability reasons.
Advantages of Renting
There are of course advantages of renting including being able to live where you want, close proximity to public transport and amenities and not being tied down in an area for too long. It can also sometimes be cheaper to rent in a blue ribbon suburb rather than to buy there so there definitely is a lifestyle factor.
With a growing rental population, this comes as good news for property investors looking to tenant their property. There is a larger pool of tenants to choose from, making it easier to find a rental tenant.
However, if you want to lead a more comfortable retirement then it is important that you get on the property ladder as soon as possible and start lining your own pockets, rather than pay off someone else’s mortgage. The longer you wait, the harder it becomes to buy a property due to rising property prices, increased competition and any changes to lending criteria or rising interest rates.
The fear of becoming a lifetime renter
If you are worried that you will become a lifetime renter and never get a foothold on the property ladder, then you need to think again. There’s still time to get on the property ladder, you just need to get clever about it and find an alternative route.
Generally older generations bought a home to live in for a good portion of their lives, but times and attitudes are changing and this strategy is no longer possible for many of us.
So what can you do to turn from a renter into a property investor and own a property? Here are seven tips:
7 Tips to get to property ownership sooner
- Start saving – The first thing you need to do is to take a careful look at your finances and start saving if you have not yet got a deposit. If you buy off the plan then you only need a 10 per cent deposit, but it can take you a good few years to save this up if you haven’t yet got any savings behind you. Don’t forget to clear any debts first as having any bad debt can affect your ability to service a loan.
- Buy with someone else – Buying a property on your own, especially in Sydney can be a real struggle and the thought of doing so can immediately put you off. However, by sharing the load and buying with someone else like your partner, friend or family member, can help get you to property ownership sooner.
- Rentvesting – If you enjoy renting then an easier way to enter the property market is to become a rentvestor. This is where you continue to rent wherever you want to live and enjoy the lifestyle renting brings, but invest in a property in a good growth suburb. This allows you to rent out your property and generate a rental income as well as equity, allowing you to purchase your next property with ease.
- Buy interstate – Similar to rentvesting, but you concentrate on investing in a property interstate, where properties are more affordable and are about to grow in value. This allows you to get more money for your buck, as a one-bedroom apartment in Brisbane can still be found for $400,000, compared to crazy Sydney prices.
- Ask your family for help – There are a few ways your family can help. Firstly, they might be able to give you some money as a gift towards your property deposit, which will get you there sooner. However, a better way is that if your parents already own their home, then you could ask them to go guarantor and use some equity in their property to hold against the deposit for the property you want to buy. Just ensure you budget accordingly and pay down this deposit as soon as possible to release your parents from this.
- Change your attitude – It is important that you develop a ‘can-do’ attitude as this will motivate you to property ownership sooner. It’s very easy to let life get in the way and distract us from our life goals; however, if you have been meaning to buy a property and a year or more has gone by then it’s very easy to continue plodding along and let more opportunities pass you by. Instead, read some motivational quotes, seriously think about what you want to achieve at retirement and act today.
- Speak to a Property Consultant – It can often be difficult to know where you should buy, what you should buy and when you should buy. We therefore recommend speaking to one of our expert Property Consultants at iBuyNew who can assist you with finding the right property tailored to your needs and requirements. This can get you to property ownership faster and easier, without all the stress of doing this on your own.
As property is generally seen as a long term investment, you need to be holding onto a property for at least 10 years to see your property double in value.
To learn more about how you can own a property before you’re 40 years old, then we encourage you to speak to us at iBuyNew as soon as possible. Book your free meeting with us today by calling 1300 123 463
Published on 24th of January 2017 by Marty Stanowich