New year’s resolutions are notoriously difficult to keep. In fact, research suggests only 9% of people actually keep theirs.
When it comes to property, clearly defined goals, such as saving for a deposit or buying a first home, are easy to set. With planning and perseverance, you’re more likely to achieve them in 2018.
1. Saving for a house deposit
Managing the cost of living and still putting aside a portion of your pay each month can be incredibly challenging. If buying a home is one of your goals, then saving for a deposit is likely to be your biggest obstacle.
If you’re striving to buy property, you really need to set goals around your spending habits and your saving habits. Dividing income into separate accounts for savings, fixed expenses such as bills, and everyday expenses including groceries and dining out. Separating your monthly income makes it more obvious when you exceed your monthly budgets. If you’ve gone over the figure, you need to draw money from somewhere. This feedback is critical to understanding the areas where you are spending too much so you can adjust accordingly.
2. Buying your first home
The last few years of unprecedented house price growth, particularly in capital cities like Sydney and Melbourne, has left some first-home buyers struggling to find their ideal property.
But with measures to cool investor activity starting to take effect, first-home buyers may be presented with a golden opportunity to get on the property ladder in 2018.
3. Purchasing an investment property
Buyers who want to get on the property ladder, but find themselves priced out of the suburb where they rent, may benefit from “rentvesting” – purchasing an investment property where they can afford so they can build equity while renting where they want to live.
Rentvesting allows buyers to put their money to work, building wealth in a shorter timeframe than saving alone. The equity in an investment property could then be used to help fund an owner-occupied purchase further down the track.
“Property prices are going up but wages aren’t. You could spend another five years saving another $50,000, or you could use your savings as a deposit for an investment”
Purchasing an investment property may actually be more straightforward than buying a “forever home”. If it’s investment that you’re never going to live in, it’s an unemotional decision; It’s about facts.
Properties in median price range, in areas with good infrastructure and population growth are likely to see continued demand, leading to strong capital growth.