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The property market in Australia has been surging in leaps and bounds of late, with price tags on homes for sale consistently growing. According to CoreLogic RP Data, over the 12 months to July 2015 alone the combined values of homes in our capital cities escalated by more than 11 per cent.
While the rise has been great for investors and those who already own property, it has made the home ownership dream for others - particularly those on their first home loans - much harder to attain. In fact, the ING International Survey on Homes and Mortgages found that 89 per cent of people in Australia think it's getting harder for people to buy their first house.
It doesn't all have to be doom and gloom, though, as once you've got your foot in the door, the increases in price will be to your benefit! The Australian Securities and Investments Commission asserts the importance of separating the 'must-have's from the 'should-haves'. Here are three compromises you may have to make when looking at property for sale.
1. The where
When purchasing a home to live in, ideally you want to be close to work, amenities and schools which most often are within one of the large cities. Given the current market, it's often the piece of land the home sits on that holds the most value.
In fact, a report from CoreLogic RP Data discovered that when it comes to bare land for sale, you get much less than what you pay for in Australia's capital cities as opposed to regional areas. In June 2015, the rate per square metre of land was a whopping $557 across the combined capital cities, meanwhile this number fell to just $170 per square metre in the combined regional markets.
Therefore, if you adopt the commute and purchase a home further out from the city, it may give you a better quality of life as your money is able to go further when purchasing your first home.
2. The what
If the location is important to you, you're reluctant to live elsewhere but the home loan from your mortgage broker is insufficient, you may have to compromise on the size or type of property you buy.
For instance, CoreLogic RP Data affirmed that for June 2015, the median price for a unit in Sydney's Centennial Park was just shy of $600,000, while on the other hand, a house was in excess of $5million. This may be an extreme example, but the principle remains true for most suburbs.
Likewise for size. If you and your partner have two children, do you really need that fourth bedroom? While it could make a great spare room or office, narrowing the search to homes with three bedrooms instead of four can make a significant difference to the price.
3. The what if
Another compromise you could make is to buy a home that needs some work done to it. Often this will allow you to buy the type of home you want in the location that you desire. Provided you make effective renovations with a bit of DIY thrown in, it could prove to save you a significant amount of money.
A report from IBISWorld found that in 2013, Australians spent over $54billion on renovations and home maintenance. What's more, this number is forecast to jump up to $60billion by 2017, indicating that more Aussies are picking up the paintbrush, hammer and nails.
Furthermore, you could easily add value to it for when you sell down the line, as you're unlikely to live in your first home for the rest of your life! Something as simple as a parking space could add an exceptional amount of value to your home. According to the Real Estate Institute of Victoria, some inner-city Melbourne apartments with a car park were worth around $100,000 more than those without.
