Entering the property market can be a scary time, especially for young couples. However, understanding key concepts and having a solid plan in place can make all the difference.
If you are asking yourself “should I buy a house now in Australia?”, know that you would have to save $1,620 on average per week to keep up with property price increases. That’s right – on average the Australian property price increases by $1,620 per week. From January 1st 2023 to January 1st 2024 we saw property prices increase in value by an average of more than:
- $125,000 SYD ($2,400 per week)
- $103,000 BNE ($2,000 per week)
- $100,000 PER ($1,900 per week)
- $67,000 ADE ($1,300 per week)
- $27,000 MEL ($500 per week)
Long story short, now is the time to buy! If you’re going to buy a property, be actively working towards doing it.
In our latest podcast episode, Jay Pace from Providence Property gives all the reasons in the world for why you should buy a house now rather than wait, which you can listen to in full here.
Guidance for young people and couples wanting to make the best financial decisions.
Be an Active Buyer not a Passive Buyer
Understanding whether you’re an active or passive buyer can significantly impact your approach to property investment. You want to be an active buyer!
Active buyers take a hands-on approach, actively seeking opportunities and making prompt and informed decisions. Passive buyers are more hesitant and less involved in the process, always looking for excuses not to buy. If the perfect opportunity to buy a house came up tomorrow, they’d probably still find a reason not to pull the trigger.
Learn the Real Cost of Waiting to Enter the Property Market
Many people hesitate to buy a house now due to concerns about timing and market conditions. However, waiting can come at a cost. Property prices may continue to rise, making it harder to enter the market later on.
Rising labour and material costs drive up property prices and renovation expenses. Delaying entry into the property market can have significant long-term financial repercussions.
For example, we witnessed an average weekly capital growth of $2,400 from January 1st, 2023, to January 1st, 2024. Meanwhile, the typical Australian household saves only $192 per week.
With 13 interest rate rises since May 2022, waiting to act based on market conditions is risky. Australia is projected to experience nearly $1 trillion in economic growth due to inheritance money from older generations being passed down over the next 20 years, much of which will be funnelled into property by younger generations.
The media has also driven fears of a market crash, which has led to more people choosing not to buy a house right now. The influx of migrants, especially with the Albanese Government’s plans, will further strain rental availability and drive up prices leaving you with no good options.
Settling down to start a family often coincides with reduced financial flexibility as you move to a single income. By this point, you may face decreased borrowing capacity, higher living expenses, and a competitive property market. Waiting to enter the market based on a “wait and see” approach may ultimately compromise your long-term financial plans due to missed opportunities and escalating house prices.
By buying property early, you can take advantage of potential growth and set yourself up for future financial stability. The property market rewards action takers, decision-makers and by sitting on the sidelines, you’re hurting yourself financially by waiting.
Consider the Cost of a Wedding and its Impact on Buying a House
Weddings are often seen as a significant expense, and rightfully so. However, it’s essential to consider the long-term financial implications, especially when it comes to buying a house. By prioritising financial stability over extravagant weddings, you can set yourself up for a brighter future.
The ideal time for buying a house often aligns with a dual-income-no-kids scenario. While it may seem scary to take on a large mortgage or invest in properties at first, you will thank yourself in 3 to 5 years.
Try to purchase your first property together shortly after getting engaged, before your wedding. This will help you limit your wedding expenses and set a financial foundation for your future.
Ditch The Fear and Excuses When Buying Property
Fear and excuses are common barriers to entering the property market. Concerns about market conditions, buyer’s agency fees, and uncertainty about the right time to buy can hold you back.
However, by addressing these concerns and seeking guidance from professionals, you can overcome these obstacles and take the first steps towards property ownership.
Going through the already overwhelming process of buying a first home becomes even more challenging with layers of fear and doubt. However, a professional can provide valuable guidance.
Typically, buyer’s agents charge between 1.52% to 2% of the purchase price for their services but say you experience significant capital growth of over 18% in one year, you will not feel like you’ve been ripped off!
While travelling and enjoying life are also important experiences, buying a house now lays a strong foundation for your financial future, allowing you to travel more later in life.
Know the Importance of Financial Literacy for You and Your Children
Financial literacy is crucial if you are looking to enter the property market. So many people want to buy property, but don’t have a plan on how to actually get there.
Understanding concepts such as budgeting, saving, and investing can help you make sound financial decisions and achieve your financial goals. Educating yourself now can set you up for success in the long run.
You actually have to take more risks now while you’re a little bit younger so that you can reap those benefits later. Even learning more about entity structures such as trusts should be a big part of your investment decision-making process.
It’s essential to lead by example, especially when it comes to financial matters. If you are advising your kids to invest but not practising it diligently yourself, how can you expect them to take your advice seriously? Family and finances are significant, yet often kept private. Growing up, your parents probably rarely discussed their financial decisions with you. It’s interesting how this dynamic changes over time.
With children now, you will notice a stark difference in the media they consume compared to your childhood. Strive to teach them the value of money, such as when they ask for school lunch money. Make sure they understand the cost and why it matters. In today’s consumer culture, where excess is normalised, instilling financial literacy is crucial. It’s a lesson that will reveal its true value as they grow older. You’re going to know who’s truly rich once you turn 50 and 60.
Realise the Impact of External Influences on Your Investment Decisions
External factors such as economic conditions, government policies, and market trends can greatly influence investment decisions. It’s essential to stay informed about these influences and adapt your strategy accordingly. By understanding how external factors impact the property market, you can make more informed investment decisions.
Australia’s major and satellite cities each boast unique economic drivers and property market influences. In today’s information-rich environment, making decisions can be challenging, especially when influenced by parental advice or conflicting stories from friends.
Perth, despite past challenges, now benefits from significant infrastructure projects and robust natural resource industries, contributing to its economic resilience. With its highest median household income in Australia and lowest rental vacancy rate, Perth has promising opportunities for buyers.
Brisbane has a lot of upcoming infrastructure investments like Queens Wharf and the Metro driven by future possibilities of hosting the Olympics, increasing its investment appeal. Brisbane offers exceptional livability, especially in surrounding areas like the Gold Coast and Sunshine Coast.
It is important you understand property cycles and long-term trends to make informed purchase decisions – do thorough research and strategic planning based on data analysis rather than short-term market fluctuations. Consider factors like population growth and infrastructure developments when evaluating potential investment locations.
Understand Property Cycles and Long-Term Trends
Property markets are cyclical, with periods of growth and decline. Understanding these cycles and long-term trends can help you identify investment opportunities and make more informed decisions.
When you look past the scary media articles and start actually reading the numbers you will realise we printed three times more money during COVID than we did during the GFC – don’t be surprised inflation went up!
But even during challenging times, there are opportunities for property investment, provided you have a solid understanding of the market.
For example, the property market in regional areas of Australia experienced growth during the COVID-19 pandemic due to reduced mobility.
But Australians had never saved as much money until COVID came, because all of a sudden we weren’t going to Bali or buying a Mercedes Benz. We stockpiled cash for the first time ever, so what’s going to happen once we get given the okay? That cash went straight into buying property and the market boomed.
Why Buy a House Now With Our Help?
Local market dynamics play a significant role in buying a house. Working with a competent team that has boots on the ground, including buyer’s agents and first home mortgage brokers, can help you make informed purchase decisions and achieve your goals. Be wary of listening to big industry figures that are often talking about the U.S. or European markets and are potentially out of touch with the resilient Australian market.
The lack of accountability these figures have compared to professionals like mortgage brokers or buyers agents is something to keep in mind. While they sell books and courses, our face to face relationships and responsibility to our clients keeps us honest.
Entering the property market may seem daunting, but with the right knowledge and guidance, it can be a rewarding journey. Confidence in property investment often stems from having knowledgeable and strategic support. Don’t let fear hold you back – take the first step towards property ownership and contact our friendly team today.
