It may be called The Great Australian Dream, however if you are renting now and perhaps saving for a home deposit, you might be thinking that home ownership really is nothing more than a dream. At the end of the day, a house is designed to provide basic shelter, so why do I think the security of home ownership is so important?
Home ownership is perceived as prestigious but it also provides you with a sense of security. When renting a property, you can be at the mercy of the landlord and could face eviction without a great deal of notice. This means that you can never be certain where you will be living beyond the immediate short term.
Home ownership will underpin your financial future
There can be tax benefits for home owners as there is no capital gains tax payable on your primary residence. In simple terms, this means home owners are free to improve their home through renovations or alterations to enhance the value of their property. Many people don’t understand the real value of this benefit.
So, what are the most commonly asked questions when making the move from renting to owning?
When should I start thinking about buying?
The answer is probably ‘now’ depending on your financial and employment circumstances, of course.
What if I can’t afford where I want to live?
Generally, higher levels of locational benefits and amenities will be reflected through higher property prices, however first home buyers should look to enter the market as soon as they can. This may mean downgrading location and amenity preferences.
Once in the property market, first home buyers can look to upgrade to areas with perceived better location and amenities down the track.
I can’t afford a mortgage…
If you are currently renting and think you cannot afford a mortgage, think again. You are probably paying off or contributing to a mortgage – it is just someone else’s! Consider how you can get that deposit together.
Recent changes to first home buyer grants in most States or Territories now only allow a grant for new property purchases such as the typical new build house and land packages. These packages do offer fantastic value for money and provide an easier transition to get off the rental treadmill. Check out some larger, reputable builders in your area and how they structure the initial deposits, to allow you to continue your current rent payments as your new home gets built.
What type of property should I be looking for?
This depends on individual preferences but there is an increasing demand from first home buyers for apartment living, which is closer to the city centre. The longer term value growth is not proven with this type of property, particularly because there are newer apartment properties being developed all the time. A case of supply exceeding demand can limit the growth here, but there are many important qualitative aspects that apartments and inner city locations also provide.
Ideally, strong demand remains for typical medium fringe suburb housing where you have the ability to improve the value yourself. Even in its simplest form, a garden makeover or coat of paint is going to improve the value of a home.
Catch more of my video’s in the latest Online Property Series for Homebuyers and Investors with some of the guys from The Block and kick-start your own Great Australian Dream.