I bought my first house in 2000 for $59,000 and the Government gave me $7,000.
Interest rates were approximately 8% and the $7,000 was from the First Home Buyer Grant, another contributor to increased house prices.
To be fair, it was in Tasmania where housing is cheaper than most other states, I didn’t own a car and I had been saving for some years. Stories about people who save $$$ for a house and live on noodles for 2 years seem extreme. Yes I made sacrifices, I rarely ate out and I hadn’t yet discovered that day after glowing skin from avocado, but more importantly housing was a lot more affordable and the cost of living was lower.
I had my heart set on having my own place and my late Father who was an Accountant, told me that renting was dead money. I sold that house 7 years later for $220,000 although I worked 2 jobs at times to afford paint and other things for my renovations. I spent many hours perched up on ladders, sanding and painting and even used a circular drop saw to cut into my kitchen cupboards, when I ripped them out. Gosh that was liberating at the time! I lived with a light coating of dust on me most weekends.
What I have learned is that the land is the valuable part. I met with a client a few weeks ago who said ‘they aren’t making any more land’, perhaps only out of sand in places like Dubai.
If this is true, does it matter if your house is the smallest one in a reasonable area? You can always renovate it over time or rebuild/extend. I know of more and more farmland being sold and subdivided for housing.
But it isn’t fair for young people today, because buying a house is a dream that they may not be able to achieve for a long time and that is disheartening, because houses are so expensive, deposits hard to save for and if you have a HECS debt which is now being indexed, I feel for you.
One thing in your favor is the ability to find work. We know the hospitality industry has been hit hard and there seem to be job vacancies everywhere. Money is money! It doesn’t matter if you earn it washing dishes or flying a commercial airplane.
So what can you do? Start saving now, even if it feels hopeless at the moment and even if it’s only $10 a week. Do it consistently until it becomes a habit. There are many options for high interest savings accounts today and you will benefit from compounding returns.
Have a savings goal amount you are working towards and perhaps if you ask your parents or grandparents to assist and you can demonstrate that you are consistently saving, they may gift you with a lump sum towards your initial deposit.
If you are considering gifting your children/grand children/niece/nephew a lump sum, speak with a financial planner to see what the monetary impact is to you. Centrelink has restrictions on gifting money, so please make you sure look into this, if you are on the aged pension.
It isn’t fair and I don’t see how young people will be able to afford to buy a house until things change from a political standpoint and house prices become more affordable, but there are strategies you can apply to try and make the dream become a reality.
General Advice Warning: The information in this post has been prepared for general information purposes only and does not take into account your personal objectives, financial situation or needs. It is not intended to provide commercial, financial, investment, accounting, tax or legal advice. You should, before you make any decision regarding any information, strategies, or products mentioned on this post, consult a professional financial advisor like myself to consider whether it is suitable and appropriate for you and your personal needs and circumstances