SPLURGE OR SAVE? The Real Options Aussie First Home Buyers Have if they want to Enter the Market

23 Aug

Owning your own home is a big part of the Australian dream, right?

Unfortunately, sky-high property prices and stricter lending rules are making it a lot harder to achieve, and many are simply giving up on the dream of homeownership altogether.

I get it if you feel like you’re having to put your homeownership plans on hold. But not all is lost — there are still options out there, and with the right mindset, you CAN make home ownership happen.

Let’s explore the options.

Live Now, Settle Later.

More and more people are choosing to focus on experiences rather than buying a home, especially the Gen Z crowd whom I often see at the upscale restaurants ordering that second bottle of champagne and dining on oysters and steak.

Instead of saving up for a house, they’re spending their money on fine dining, travel, smaller luxuries, and weekend getaways.

Some are choosing to invest in things like stocks or cryptocurrencies, hoping to make money without the leverage of borrowed money.

Others are enjoying their lives right now by treating themselves to luxury items or securing rental homes in the more affluent inner city areas so they can live the lifestyle without paying the price-tag of a home in that area.

While it’s great to enjoy life and to receive fast gratification for your efforts, it’s important to think about the future too.

Buying a home can be a good way to build wealth over time, (and of course to have a secure roof over your head).

Plus, if house prices keep going up, (as they’ve done the past decade) you might regret not buying one sooner!

Time to Get Strategic.

Many would-be homeowners are taking a strategic approach to property ownership and making short-term sacrifices in exchange for a long-term win.

By renting and diligently saving for a larger deposit, they aim to weather market fluctuations and secure a stronger financial position, entering the market with greater capital with perhaps the ability to buy in a better area.

But one must be mindful that rents are climbing too. Can you really out-save the market? I’m sceptical.

Those who are adamant to get their foot in NOW rather than continue to rent and save are considering relocating to fringe suburbs and regional areas offering more affordable living.

In my opinion, this isn’t such a bad idea.

My First Home Was In A Fringe Suburb.

In fact, I did exactly this to buy my first home. I bought the next suburb over to the one that had already boomed and guess what. It soon followed suit. But I was able to get in and secure my house before the prices rose.

Yes, one might argue it was easier 20-odd years ago but with determination and the right mindset, you can still pull it off today.

Just stop the short-term luxuries for a little while.

Government Assistance Programs Have Got Your Back.

The good news is you don’t have to navigate the property market entirely on your own. The Australian government, along with various state and territory initiatives, offers a helping hand to first-time buyers.

Federal Government Support:

Home Guarantee Scheme (HGS)

This program allows eligible buyers to purchase a property with a deposit as low as 5%. It encompasses three options: First Home Guarantee, Regional First Home Buyer Guarantee (ideal for regional areas), and Family Home Guarantee (for families). You can find more information and eligibility details on the Housing Australia website.

Help to Buy Scheme (certain states only)

This scheme provides financial assistance in the form of equity contributions towards a new or existing home purchase. [Check your state’s specific program details]

State-Based Initiatives:

First Home Owner Grants

Many states offer financial grants to first-time buyers, often with stipulations like purchasing a newly built home. Research the specific program in your state for eligibility and details.

Stamp Duty Concessions

Some states provide first-time buyers with reduced or even waived stamp duty fees, which can be a significant saving. Look into your state’s revenue office website for information on stamp duty concessions. [This will vary by state]

Shared Equity Schemes

Similar to the federal Help to Buy scheme, some states offer shared equity programs to assist with the purchase. Research your state’s housing department website for more details. [This will vary by state]

Remember that eligibility criteria, financial assistance amounts, and program availability can vary widely based on your location, income, and other factors.

To fully understand your options and determine eligibility, consulting with a financial advisor is strongly recommended. By taking advantage of government assistance programs and seeking professional financial advice, you can increase your chances of achieving your dream of homeownership, even in this challenging market.

Your Path to Homeownership Starts Here.

While the property market might seem daunting, there are clear pathways to homeownership. By carefully considering your options, saving strategically, and exploring government assistance, you can bring your dream of owning a home closer to reality.

To discuss a personal plan of attack, book a Property Portfolio Planning session with me.