Savings of Aussie first homebuyers soon to be surpassed by climbing house prices

Introduction

Many Australians are trying to break into the property market, but hitting a dead end when it comes to growing their savings. In an increasingly austere financial world, purchasing a first home is a major struggle. Rising interest rates, world-wide inflation, and an ongoing cost-of-living crisis are not going to help lower housing prices anytime soon. This blog post breaks down the nation-wide issue of rising house prices and stagnating savings, providing several strategies to help you increase the money you have in the bank.

Problem

Despite working hard to save money for their first home, in the near-future many want-to-be homeowners may not be able to afford to purchase a house even if they are saving significant sums of money. According to research, every month most first homebuyers put aside about $1600 to buy a home. This will not, however, be enough if property price growth rates reach 5.8 percent this year. The value of homes in our nation increased by 0.8% in September alone.

The good news is that Perth is one of the major Australian cities where property increases are not as high, with 1.8 percent annual growth in comparison to, for example, Melbourne’s 5.1 percent. Perth, however, will be seeing a large increase in population over the coming two and a half decades and shall require thousands more homes to be built to house future residents.

Strategies

However, there are still a wide variety of things you can do to make sure you have enough savings in the bank to buy a property that will not only suit your needs, but also puts you on the path to your dream home. It’s important to remember that your first home is not necessarily your ‘forever home’. It’s an investment, and a step in the journey to your property goal.

One way to make sure property prices don’t overtake your savings, is to invest in a house in what is called a ‘bridesmaid’ suburb, rather than in the most popular area. You can also investigate what home guarantee schemes are available for you. One example would be the Australian Government’s First Home Guarantee Scheme. The First Home Guarantee Scheme lets people that haven’t been the owner of a home for a decade buy property with a deposit of five percent (at lowest).

Furthermore, if you pay back any current debt, decrease your credit card limits, and choose to buy a unit with less or lower strata fees, you may have more borrowing power. This means you could potentially borrow more money and get a better property, placing you further ahead on the path to your dream home.

Conclusion

Ultimately, buying your first house can be challenging at the best of times. With housing prices still steadily rising, it is even harder than it has been in the past to break into the property market, and it is more important now than ever before to have strong support behind you while trying to do so.

If you would like some more information on how to boost your savings while trying to purchase your first home, or simply require a little help or advice, feel free to reach out to the friendly team at AA Finance Solutions.