Younger home buyers feel the high entry prices are locking them out of a market which is dominated by older generations who already have a financial foothold. People who have owned their homes for decades are unwilling to part with their properties for anything less than the best market value, leaving young people stuck for buying options. They're struggling simply with the cost of living and essentials, let alone financing a mortgage repayment. The dream of home ownership is becoming a ‘one day' fantasy.
Why Younger Generations Feel Locked Out of the Market
Many young people believe that the cost of buying a home in an Australian capital city is prohibitive. Competitive real estate markets in big cities across Australia require buyers to act quickly if something does become available, and many younger buyers feel as though they are never going to be able to seize a property on short notice due to an inability to save up for an initial down payment.
The truth is that home values in major Australian cities are skyrocketing. Most people who are just starting out aren't able to buy a home, so resign themselves to renting. Tenants are able to avoid the hefty repayments and deposits that come with owning a home, however by renting, they are not paying money towards themselves.
Often the only viable option for young people is to look for homes in areas that are not as popular and are located further away from cities. Suburbs that offer access to busy metropolitan areas are not without their charm, and opting for a suburb instead of a city center can reduce steep purchase barriers significantly.
The Silver Lining
There is some good news for young home buyers who feel that they'll never realise their dream. If you're looking for the key to property ownership, it lies in extensive planning. While it takes several years to get ready to make the purchase, it's entirely possible for the average income person to buy their first home if they're willing to be savvy, do their research and make a few compromises here and there. Here are some tips for preparing for the biggest purchase of your life:
- Build up your credit to boost your chances of being approved for a mortgage. A good credit rating also gives you the opportunity to obtain the best rates on a home loan. Keep your debt levels low and make all of your payments on time to save money on your future mortgage.
- Save up a large sum of money over several years. Down payments and closing costs are substantial. While you may be eligible for programs that do not require high down payments, you can eliminate the need for mortgage insurance by lodging a 20 percent down payment.
- Learn about and monitor real estate trends in cities that appeal to you. This allows you to narrow down your choices when you're deciding where to move.
Begin your research by using these home loan calculators and advice sheets provided by Mortgage Choice. With the right preparation and honest self-assessment of your situation, you're in good stead to eventually make your ‘one day' home ownership fantasy into a reality.