Attention young couples! You're married, you’ve combined your belongings and you’ve moved in together. However, at this stage, your little apartment might feel a little small for a new family, so that's all it is - a start. You're both dreaming much bigger, and you're starting to look for your dream home.
It's right here that we should state, your dream house is rarely your first house. The first step to home ownership might be closer than you think though, even in the light of rising weekly rents, escalating home prices and rising living costs. Tight rental markets are serving to keep pressure on weekly rents, as well as house prices, making it even more difficult for newlyweds looking to enter the property market.
It’s a serious matter that requires a response from governments on multiple levels, but, with the right advice and some careful planning, newlyweds could be staking out their own patch of turf sooner than they thought possible.
1.Getting a deposit together
The first step is to investigate what government assistance is available and to save a deposit, which is not as difficult as people think. It’s amazing how simple it can be to cut back on what we call luxury items and the difference this can make to savings.
Cook more meals at home and take lunch to work, rather than eating out, where meals can cost at least twice as much. Doing that five days a week, will really make a big difference over the course of a year – perhaps creating a saving of around $4,000.
Cutting back on other socialising activities so that a night out is enjoyed once a fortnight, instead of a weekly or more frequently can also save a significant amount of money. These are just two small changes, but the impact on savings can be quite dramatic.
2. Plan to buy strategically
Sometimes, the path to ownership of your first property might be a little unconventional. You could consider purchasing an unbuilt apartment off-the-plan. You only need a 10 per cent deposit to do this, with the balance not required until completion, which might be 12 to 18 months down the track. This gives you time to save more money and, when settlement comes around, your plan could be to immediately rent the property out. With the help of a financial planner, you may find you can continue renting your current home and manage the repayments on your investment apartment until you can afford to move in. The downside to this plan, however, is that you may not be eligible for any government grants because your property will not be your primary place of residence.
Your second option could be moving back home, where things are much more affordable. The rate of increasing weekly rentals is making renting while saving a deposit an unaffordable option for many. So, living with parents, where you can pay rent at a much-reduced price, can be a solution and your parents might even consider saving a portion of the rent you pay to help you get your deposit together.
In addition, everyone will have the benefits of shared accommodation, where parents and children can share the living costs.
3. Seek professional advice
But, the best thing to do is to seek the services of a financial planner and adviser as they have the expertise and knowledge to assist with your financial needs in the way that best suits the income and lifestyle of each couple. Financial planners and advisers are an excellent means of making savings start to work for you. They can offer advice on how best to turn those hard-earned dollars into interest-earning capital.
First homebuyers are an important segment of the Australian property market and it is incumbent upon governments and the industry to ensure there are affordable housing options for all sectors.
That said, it’s tough saving a deposit at a time in life when you might really rather be travelling and enjoying your newly found freedom. Nonetheless, while property prices are high, interest rates are at historic lows and that does create opportunities for young couples prepared to take maximum advantage of a careful, strategic planning.