How easy is it to own your own home?
In September the Australian Bureau of Statistics (ABS) released their survey of household income and wealth. The statistics identified a trend that isn’t a good one for the Australian economy of the future of our families. Home ownership rates are continuing to fall. The statistics showed that very few Australian homes are owned outright with mortgage-free owner occupier properties falling more than 12% over the last two decades. This correlates with a rise in households that are rental properties of almost 6% for the same period.
What we find particularly alarming is that these two trends seem to be deterring people from entering the property market in any way at all. While the incredibly generous First Home Owner Grants available have made it easier for some to get onto the market, not everyone is taking advantage of that. From our experience talking to First Home Owners, it seems as though it is saving up for that initial deposit that is the difficult thing. We wanted to put this all in perspective and spark some inspiration in our community so we thought we’d break it down for you and show you just how affordable.
Full disclosure, we have used one of the ‘Big Banks’ online tools to calculate this and everything is subject to changes and personal situations. However, when we work with first home buyers, they have access to our trusted Mortgage Brokers to make the process easy and best outcome for them.
So here is the thing. How much would you have to save up to buy yourself a home?
Say you have found a really great, brand new house in South-East Queensland for $390,000. If you are eligible for the First Home Owners Grant, you will receive a $20,000 contribution from the government to cover up-front costs and contribute to the deposit. Using rough estimates, the upfront costs will be around $2,700 due to the Stamp Duty Concession for first home buyers, so you are left with an automatic $17,300 to contribute towards your deposit. So, what do you need to save up to create a deposit that is 10% of the purchase price? About $20,000. That’s all. If you can do that, then you can buy your first home.
Now that you have a much more realistic figure in your head, the next step is to think about how to generate it. How can you save $20,000? Well, consider this. The average graduate salary for an Australian graduate under the age of 25 is $52,500. So, if you can manage to live on half and save half of your salary for one year, you’ve just generated that $20,000 – well done!
If the idea of living on $500 a week seems a little farfetched, then think about ways you can cut down every day expenses. How many times do you buy a coffee each week? Cut it down to one per week – your wallet and your appreciation for the little things in life will increase. If you live close to a supermarket, why don’t you look around for a local fresh produce market instead. Brisbane is full of them where you can get farm fresh fruit and veges for a lot less. Consider buying your meat in bulk from retailers like Super Butcher. Save money and enjoy some great dinners. If you really want to tighten your financial habits, consider going back to cash. Set a spending budget each week, get that out in cash and use that for all purchases. You will be surprised at how different you feel parting with a good looking $50 note than you do when it’s just a simple tap on the pay pass machine.
So be smart, look at the big picture realistically and do your research – the reality of owning your first home is probably a lot closer than you think!
If you’d like us to assist you in buying your first property or would like to discuss your capacity to buy a property with a mortgage broker, please let me us know.