Buyers are getting more creative when it comes to finding ways to purchase their first home. IMAGE: Canva
  • With circumstances making it more difficult to purchase a first home the traditional way, buyers are now exploring other options.
  • Rentvesting is a popular trend, allowing people to buy in cheaper suburbs, but rent in more desirable areas.
  • Many employees are still able to work remotely, meaning their work commute is no longer a barrier to finding the right suburb to buy in.

The current property markets can be difficult to navigate for first-home buyers with rising property prices and high interest rates, combined with housing supply issues. The main struggle for buyers is that we are seeing property prices rising whilst the lending market is tightening, which is making it more and more difficult to secure a home.

Due to the current climate of high interest rates, many home buyers are also seeing their borrowing power taking a hit. However, the rising property prices aren’t seeming to slow down because demand continues to outweigh supply.

In response to the current market conditions, discerning home buyers are exploring alternative strategies for purchasing their first house. Here are the top four methods they’re using to secure properties.

Rentvesting

Rentvesting is rising in popularity, and is a term coined for when property investors buy a property in a location where they can afford to, but rent where they actually want to live.

Numerous first-home buyers find themselves priced out of their desired market, yet are reluctant to compromise their dream location by relocating to a different suburb, away from their family, friends, and lifestyle amenities. This is prompting numerous property buyers to embrace rentvesting, allowing them to make the most out of their house deposit savings while maintaining the lifestyle and location they desire.

It is a good way to get a foothold on the property ladder, as well as own a property.
If their investment property is cashflow positive, they can use the excess cash to subsidise their rent, fund a holiday, and increase their savings and serviceability so they can afford to buy a home in the future.

Furthermore, the interest paid on the mortgage of an investment property, along with property depreciation and other associated costs, are eligible for tax deductions. This means investors can potentially receive more refunds during tax season. In contrast, interest paid on a mortgage for one’s own home does not qualify for tax deductions.

Sister suburbs

Finding themselves priced out of their desired suburb, some home buyers are turning to neighboring areas as “the next best thing”. Exploring immediately adjacent suburbs allows them to make minimal compromises while still seeking their ideal home.

Another option is to look at the “sister suburbs”. These suburbs might not be immediately next door to the desired suburb, but they will offer similar conveniences and amenities at a cheaper price point for buyers with limited budgets.

These are often new suburbs that are ’up and coming’ and are going through gentrification, meaning there is a good chance that these sister suburbs will receive better growth over the long term and be a stepping stone to get to their dream home.

Tree change and sea change

The working-from-home culture continues to rise in popularity for many businesses due to the cost benefits, efficiencies, and improved employee morale as workers can have a better work-life balance overall.

The rise of remote work culture has prompted many home buyers to contemplate a move to rural or coastal areas, seeking a better quality of life and more affordable mortgage options to achieve their dream home and lifestyle. Many home buyers that are priced out of the capital cities consider making a tree or sea change as they become increasingly frustrated with both the competitive property market and rising cost of living.

One of the downsides in this shift to living remotely is that we have witnessed property prices in many of the popular rural towns start to boom, as demand outweighs supply. Some of the beautiful coastal towns are starting to become just as expensive as buying in a capital city.

Government support

Savvy home buyers can still get some Government assistance if they meet certain criteria. Each State Government will have their own schemes available for first-home buyers. If you look closely at the fine print, home buyers might find that they tick the boxes, or can meet the criteria to get the additional support.

Some of the Government incentives available on offer include the First Home Guarantee Scheme, Help to Buy Scheme, First Home Super Scheme, First Home Owner Grant Scheme, and Stamp Duty Waiver. Not all of these schemes and grants are available to all buyers, and they aren’t available in all states, so it is best to check what’s on offer and available to you on the State and local Government websites.

Good mortgage brokers and accountants should be able to point you in the right direction on whether these are available to your circumstances.

In conclusion, navigating the current Australian property market landscape presents many challenges for first-home buyers, with rising prices, tightening lending markets, and housing supply issues creating obstacles. However, amidst these challenges, there are still opportunities for determined buyers to explore alternative strategies to help them achieve their homeownership dreams.



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