How to beat housing affordability

12th December 2006

Buying a house in the current property market can be a daunting ambition. However, Australians are finding new ways of beating the housing affordability blues, using creative techniques to crack the market.

Australian Property Investor magazine's December issue reveals how both first homeowners and investors can leap the affordability hurdle and get into the market.

"Housing affordability is at historic lows but Australians can't afford to sit and wait for a big-picture solution from governments," says API editor Eynas Brodie. "Instead, homebuyers need to take action on an individual level to tear down the wall of housing affordability in any way they can."

Brodie says, "There are many different tricks and tips that can help you to buy property in the current market - you just need to know what they are and how to use them."

Five of the techniques revealed in API are:

1. Live at home

"Living at home for longer is a great strategy to save money - so long as you don't blow all of the money that you save in rent on material things and entertainment," says Brodie. "Staying at home and squirreling away some serious savings can help prospective homebuyers save a deposit in a snap. It may not be fun, but it's functional."

2. Take in a tenant

"Paying off a mortgage on your own might make home ownership look near impossible for some young would-be buyers," says Brodie. "However, meeting the repayments is an awful lot simpler with a bit of help. By using this technique, renters can stop helping to pay off someone else's mortgage and instead start getting someone else to help pay off theirs."

3. A little help from your family

"More and more Australians are relying on their families for help to get into the property market," Brodie reveals. "You read a lot about the intergenerational war between baby boomers and Generation Y - but in the real world it's more likely that baby boomer parents are helping their Gen Y kids get a leg-up into the property market."Both parties can benefit from such an arrangement," adds Brodie. "And best of all, if things are structured right the parents shouldn't have to put up the family home as security for their kids' loan."

4. A little help from your friends

"Many buyers who can't crack the market on their own are starting to team up with their friends or siblings in order to buy property. This can be a great solution to ensure you get into the market now, rather than just sitting and hoping things become more affordable," Brodie says. "It's just important to be sure that you've both got the same long-term goals for the property and that you put the right legal protections in place."

5. Creative financing

"Home lenders now more than ever are fighting for customers' business. Would-be homebuyers and investors can use this competitive environment to their advantage by either borrowing a greater proportion of their purchasing costs or by taking out a loan over a longer term," Brodie says. "These are both viable options, but buyers do need to be aware of the potential risks involved."

HOW THEY DID IT

As well as revealing the best ways to use these techniques to buy property, API reveals the secrets behind the success of three recent property purchasers. The stories of how these buyers - most of them young and single - bought property should provide inspiration for those who want to get a foothold in property but don't know where to start.

 

© Australian Property Investor magazine - www.apimagazine.com.au. Reproduced with permission. To subscribe to API, go to www.apimagazine.com.au or pick up a copy from your local newsagent.

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