Why you should be buying your first property now instead of saving and waiting
Buying property is a big commitment and you’ll want to feel comfortable that you’re ready to take it on. But waiting too long could mean missing out on having equity that could make your future more financially secure.
A solid investment
There’s something about investing in bricks and mortar that makes you feel your money is safe. But is this just a popular notion that we’ve grown comfortable with? What should you be looking for in a long-term investment and can property deliver?
When choosing an investment strategy, you need to be as sure as you can that your assets are going to rise in value faster than inflation. According to Australian Bureau of Statistics (ABS) data from June 2014 to March 2016, the Residential Property Price Index has risen by 12 per cent from 116.4 to 130.4 and the Consumer Price Index from 105.9 to 108.2, an increase of just over two per cent. So our house prices are currently outstripping inflation almost six times over.
And if you’re buying property purely as an investment, it offers tax incentives and equity you could use to buy more property. So if you’re saving for a deposit on a dream home and falling short of the amount you need, it could be worth thinking about buying an investment property now instead.
When interest rates are as low as the current 1.5 per cent cash rate, it certainly makes a loan on any property purchase more affordable. It also means your deposit savings aren’t going to be growing much.
And there are some recent changes in the real estate market that could make it easier for you to buy. Recent figures from the ABS show the average house price in Australia dropped by 0.2 per cent in the March 2016 quarter. This is the first time prices have fallen since the September quarter in 2012. In a slowing market, you’ve got a better chance of snapping up a property for a price you can already afford.
Make the most of your first buy
Before you rush out to buy, it’s worth doing some research into which properties could add to your equity, faster. That all-important growth in value could come from buying a property and renovating or finding a suburb that’s on the rise, or both.
In either case, it’s really important to do your homework. Find suburbs where there’s new infrastructure in the pipeline, which is a good indicator of a future boom in property values. A certified valuer or real estate agent can give advice on additions that could improve your property’s resale value. And speak to an Aussie mortgage broker to get a real sense of what you can afford.
Are you thinking about buying your first property as a home or investment? Share your thoughts and ideas in the comments below.