The last 2 years in the Australian property market has been nothing short of astronomical.
Achieving an average of 22% growth in a mere 12 months is something none of us thought we would see, particularly during a global pandemic!
While this proved to be of extreme benefit to seasoned investors and existing homeowners, it only proved greater difficulty for first-time investors and buyers looking for a home.
In this article, we take a look at the key challenges currently facing investors and how AllianceCorp can get you ready for your next purchase – faster!
The Challenges
1. Saving For A Deposit
In 2020, a First Home Buyers Australia (FHBA) survey revealed that over 40 per cent of Australians found saving a deposit the most difficult part of qualifying for their first loan. Based on today’s national average house price, a 20% deposit amounts to a whopping $213,200 – a huge undertaking for anyone trying to get into the market.
Saving for that hefty deposit is all about setting a goal early and sticking to it. This will involve considerable planning, researching and sourcing appropriate investment options, sacrificing non-essential expenses and most importantly, sourcing a money management specialist to keep you accountable towards your financial goals.
To save at a faster rate, prospective investors must dedicate their efforts to spend ‘smart’ and plan each step towards their goal with serious consideration.
2. Surging Property Prices
With the median house price across all Australian capital cities now sitting at $1,066,133, it’s no wonder that investors are finding it increasingly difficult to push through the property market.
Australia’s capital city median house prices
Source: Domain December 2021 Quarterly House Price Report
However, by working with a property professional such as a Money Coach, Buyer’s Advocate and/or Property Wealth Planner, you can be assured that they will work in your best interest to find an affordable, investment-grade property that will deliver rewarding returns FASTER!
3. Qualifying For A Loan
Qualifying for a loan is becoming increasingly challenging as a result of several factors.
1. Due to escalating house prices in most capital cities, buyers are unlikely to purchase a home in a location they would ideally like to live in as they are required to save a much bigger deposit that isn’t relative to wages growth, pricing many people out of the market.
This makes rentvesting a much more attractive offer as it allows investors to rent in these locations, while still managing to purchase an investment property in a more affordable location.
2. With speculation of interest rate rises, this also adds further pressure on investors and buyers as they may be unable to meet monthly repayments.
3. In an effort to stabilise risks amid both the slow wages growth and surging house price, lenders have lifted the minimum interest rate buffer up to 3%. Lenders now assess new borrowers’ ability to meet their loan repayments at an interest rate that is at least 3% points above the loan product rate, up from 2.5%.
Our Recommendation
Leveraging the service, knowledge and experience of the right Money Coach and Property Wealth Planner, such as those at AllianceCorp, we can fast track your ability to get into the market by three years!
To help save your deposit, a Money Coach is crucial to consult your current cash flows, debts and budgeting capabilities, identifying opportunities for you to curb your expenditure and spend ‘smart’, while also keeping you accountable. By working with a Money Coach in conjunction with our additional acceleration programs, you can further reduce your entry into the market by another 12 months!
In the same vein, working with a Property Wealth Planner will deliver a tailored strategy suited to your financial circumstance and overarching financial goals – dissimilar to the likes of a traditional Real Estate Agent. With nation-wide networks and industry leading research underhand, the team at AllianceCorp are well equipped to kick start your investment journey and put you on the path to achieve financial freedom.
If you are looking to get into the property market but are not quite equipped with the necessary funds, simply fill out the form below to request a FREE consultation with one of our Money Coaches to get you into the property market sooner!
