Rents are rising across Australia and while buying a property requires careful thought and planning, Australians who understand their limitations and opportunities may want to consider exiting the rental rat race for the prospect of something that’s all their own.
Mortgage Choice spokesperson Kristy Sheppard doesn’t find it surprising that first homebuyers have turned their back on home ownership in the face of affordability concerns. However, she believes that those who are determined to achieve their goal of home ownership will find their goal attainable.
"Owning a home is not, and was never, a matter of instant gratification. It's a serious commitment,” she explains."Tenants who are keen to escape the rental roundabout need to contemplate their future wants and resist temptation to live only in 'the now'. With the housing undersupply issue looking to continue while population growth and rents rise, rental vacancy rates fall and housing prices trend upwards, some may find that now is a good time to set a property purchase plan in action.”
With the residential property market currently observing its traditional mid-year slowdown, auction clearance rates are falling slightly in many states. According to Australian Property Monitors, total weekend auction revenue for Sydney, Melbourne, Brisbane and Adelaide was up $97m on last weekend, down $34m on the same weekend last year. Prices, it seems, are steadying, providing homebuyers with an opportunity to negotiate good deals.
According to Mortgage Choice, the cost of renting is edging closer to the price paid by a borrower on a mortgage.
"The median asking rent in the March quarter for a unit or apartment in Sydney was $1,777 per month and for Darwin it was $1,681. Brisbane and Perth stood at $1,517, while Melbourne was at $1,473 and Hobart was at $1,170. The average Adelaide unit rented for $1,127 per week,” says Sheppard.
In comparison, Sheppard says that a 30-year $300,000 home loan at 7% costs $1,996 per month in repayments. "Of course, ownership costs such as land tax/strata fees, council rates, maintenance and water consumption need to be taken into consideration, but the similarity in cost between monthly rent and loan repayments within some areas is encouraging for potential buyers,” she says.
Even with tighter lending assessment criteria there are still a number of options available to first home buyers, such as family equity loans or co-ownership that may help you enter the market sooner than you expect.
Ready to take the plunge? A reputable mortgage broker like Mortgage Choice can help you explore a variety of lenders and loan options, so if the thought of paying your own mortgage instead of your landlord’s is appealing, now might be the time to consider a home purchase.