June 23, 2014
I recently heard a story about the true cost of waiting to buy property, and the cost of choosing different paths.
Two friends who had done really well at school and university ended up flatting together in Sydney and working in high paying jobs.
They rented together for about a year before one of the girls decided to buy an old rundown terrace in Bondi for $550,000 - that was 8 years ago. It was a huge amount of money to pay for a terrace and she struggled to make it work. She rented a bedroom to her friend and turned the dining room into a bedroom and rented that out.
While she was focussed on paying her mortgage off, her friend focussed on her lifestyle. They were only in their 20s and had just graduated from uni - so wasn't that the time for fun!
She sold her terrace a few years later for $850,000, post GFC, during the flat market. She then bought a semi with an amazing view on the lower north shore.
Buying and selling the terrace in Bondi gave her a huge deposit and allowed her to upgrade. If she hadn't put in a couple of years of hard work, she wouldn't be living in her dream home now.
Even though her friend was earning more at the time, she is now complaining that she will probably be renting forever.
That same terrace today would be worth at least $1.2 million.
If you're waiting to buy, what's it costing you?
In Sydney metro, right now, waiting 5 years would probably cost you around $500,000. In Brisbane metro, some property prices have almost doubled in the last 8 years.
If you're still "getting ready to buy", hurry up!
What’s it costing you to not buy right now and how much more will you have to earn and save to buy the same property next month or next year?
A property can easily jump $10,000 or $20,000 or $30,000 a year in value.
It can even jump $100,000 in boom times, depending on where your property is located.
Can you afford that?