I am not sure if you noticed but every time the market seems to reach it peak and probably ready for a downturn the media seems to talk about affordability. I have heard the discussion about our children not being able to afford homes and a generation of renters.
I also noticed that retirees have a huge battle in hand as to where they could go after they sell. While the first issue is a commercial truth the second is something that is encompassed by subjective and retirement financial needs.
New gen purchasing a property.
The new generation in the age group of 25- 32 have got their first job after uni, trying to move out and find they cannot afford Sydney or Melbourne units .The deposit as well as the repayments are an issue. Sydney and Melbourne have the best job opportunities ,They have their friends and family which is there support structure and so they need to be in these Metros and if possible near the bars and shops and where things are happening. The above are all assumptions and many will not fall in this category.
Options for New gen
the options are .
Granny flat: A granny flat, or secondary dwelling, is self-contained accommodation within, attached or separate to an individual home. A Council or accredited certifier can certify granny flats as complying development without the need for a development application
provided they meet the specific development standards in the State Environmental Planning Policy (Affordable Rental Housing) 2009.
To be allowed to build a granny flat as complying development it must be:
1.Established in conjunction with another dwelling (the principaldwelling),
On the same lot of
- land as the principal dwelling (and not an individual lot in a strata plan or community title scheme), and
- May be within, attached to, or separate from the principal dwelling.
- Timing: May be approved within 20 days if all council conditions are met .
Costs : 80,000 to 130,000
Getting help from mum and dad .
Giving cash as a gift for a deposit
Some mums and dads are good planners and do start a saving habit with their children for balloon expenses like weddings house deposits etc
A cash gift will be considered by banks of the prospective owners can service the loan
Using the family home or a property as a guarantee.
If the parents have equity in their principal home or in one of their investment properties this could be used as a deposit. This again would be subject to the children being able to service the loan.
Buying in partnership with a financial
As crazy as it may sound it is preferable to have a clear cut agreement if the parents are going on the title, there are liabilities that could affect the family home too. We have seen situations where parents are now paying for the entire installment while the children are unemployed
Buying an investment property for a deposit
If you are planning ahead this could be a good option. Many a time youngsters wait to collect a deposit to buy their dream home only to realize that the prices have gone up and their deposit is not enough. One could consider
buying in places where you could afford today and believe prices may go up.
You buy a property for $350,000, putting down a 10 per cent deposit ($35,000) and borrowing the
- remaining 90per cent ($315,000)
- Over time, the property increases in value by $100,000. You create a cash pool of $80,000, which can be used as a deposit to buy the property that you dreamed of.
Buying in partnership with a financial agreement.
As crazy as it may sound it is preferable to have a clear cut agreement if the parents are going on the title, there are liabilities that could affect the family home too. We have seen situations where parents are now paying for the entire installment while the children are unemployed. There are various option to protect one’s self and it would needed to be worked around with an experienced solicitor.
There are various options the government is considering for first home buyers. Some of them being that one could use their super for a deposit. Victoria has indicated that there will be no stamp duty for first home buyers for purchases under 600K I will keep my ears to the ground and will inform you if you’re keen to know.
The government has had NRAS as an investment vehicle for many years. Most people I speak to do not know that the government gives you 10K per year for 10 years if you buy an NRAS property.
About the Author
Anil has been involved in various facets of real estate over the last 15 years in Australia. His strengths have been to understand the motivations for people to change their principal dwelling and to successfully manage the
transition both on a commercial and emotional level. Gaining several accolades for his work over the years, he is well grounded and never forgets that buying and selling homes is a huge emotional decision.
Disclaimer; Any of the above information is not to be considered as advice and does not take your personal circumstances into consideration. All the information is general in nature and you are strongly advised to consult a licensed financial advisor for your own investments.