As the General Manager of Century 21 Australia, I find it hugely satisfying when I see young Australians taking the plunge and delving into the property market. There's nothing like the look of excited exhilaration combined with sheer terror that appears on the faces of those winning their first auction or signing a contract of sale for the first time. I'm a true believer in the Australian dream of owning your own home; I try to encourage the young Australians I come into contact with to pursue home ownership when in a viable financial position to do so.
Having said this, I was quite concerned with the data that was recently released by Bankwest and the Mortgage and Finance Association. According to the Home Finance Index put together by these organizations, not for a long time has such pessimism been seen amongst prospective first time buyers, with more than half of those in Generation Y (those born between 1980 and 1990) putting off plans to buy their first home because of the debt required to do so.
With the first home owner grant being pulled back by the Government and interest rates on the rise, on average only 43.7 per cent of potential first time buyers nationally are optimistic about the prospect of home ownership. As I said, quite concerning!
In the face of this data, I must urge all the Gen Ys out there to not give up! If owning property is something that interests you, then there are definitely ways to overcome the challenges that the market currently presents.
Before buying I always encourage people to set out a realistic budget, taking into account both financial obligations and lifestyle factors. You need to know how much you can afford to put towards your home each month, while still having enough to enjoy life!
Home loans can be daunting, but remember this: knowledge is power. Do your research and find a mortgage that suits you – both financially and psychologically. Try to find a fixed interest rate – this can help to reduce some of the stress that rising interest rates often cause. Make sure that you are comfortable with your monthly repayments, and where possible try to pay a little bit more than your minimum monthly obligation – this will reduce both the term of your loan and the interest you have to pay.
I've often found that when it comes to home ownership, the little things you may have to skip in order to be able to save a deposit or pay a mortgage seem to fall by the wayside. I think it goes without saying that choices do need to be made; this could mean less nights out or taking lunch to work. But you'll own your own home! To me that's definitely worth it.
In terms of the actual property you purchase, look within your price range. This may mean buying something slightly smaller, an apartment rather than a house perhaps, or in a different area. There are still many affordable areas all over Australia; buying into them now may even guarantee you better returns on your investment than if you were to buy in more expensive suburbs.
So to those in Gen Y, I say GOOD LUCK! Please feel free to pop into one of our Century 21 Australia offices around the country – our property experts can give you mortgage tips, buying advice and support through what is arguably one of the biggest commitments you'll ever make.