If you're a first-time homebuyer looking at your finances and wondering if you are — or will be soon — priced out of the local housing market, take solace in the fact that you aren't alone.
The prices of real estate in Australia are soaring, sidelining many would-be buyers. According to CoreLogic, prices were 17.5% higher over the first nine months of the year. They were up 20.3% over the past 12 months. In Brisbane, this annual growth rate is the fastest since the year ending in June, 1989.
The hike in home prices is happening at such a rapid pace that it far outpaces wage growth, frustrating individuals and families who don't yet already own a home whose equity can be maximised. This bears out in financial data CoreLogic shares, noting that applications for owner-occupier, first-time home buyer loans fell by 23% between January and August of 2021.
The rate at which housing prices are soaring has started to slow, though, a bit of good news for prospective buyers. According to analysts, the housing market moved past its peak rate of growth in March. The monthly rise has now slowed to 1.5%.
So, what should you be doing if these real estate market rises have sunk your plans to purchase a home?
First, take some deep breaths. There's no need for panic. No seller's market lasts forever; real estate — like all things related to the economy — is cyclical.
The rising prices are understandable. Inventory is low, demand is high. Properties are on the market for less than 40 days on average around the country. At some point, market forces will shift these trends.
For now, it's important to consider your needs and that of your family and think about how you can meet them in realistic ways. Multi-generational living arrangements might be possible should you need to move urgently. Unit prices for apartments being lower, a smaller space might be an option. And in the meantime, look for ways to raise the funds you need to eventually get on the property ladder.
Any month you can live below your budget and save some extra cash, you're building wealth. It's that simple. So don't overlook the basic practices you already know to save money.
Remind yourself too of factors in your favour. Your age might be one of these. If you aren't near retirement age, you have time to make some strategic investments and wait for them to mature. These might take the form of stocks such as index funds which give you the chance to benefit from economic growth. In addition to looking at stock-market investments likely to pay off in the next several years, you can consider purchasing an investment property. Once its equity grows, you can sell and use the profits to pay for an owner-occupied house.
No matter where you are in the process of planning for homeownership, you can benefit from a conversation with an experienced real estate professional. Contact the experts at Ray White Surfers Paradise today, and we can help you understand everything the right agent can do for you.