Much of the focus in the news is how unaffordable the property market is in Australia now. Also, how it is almost impossible to save a deposit, since prices have been rising by more than the deposit many first home-buyers can save. So, what to do?
Rather than focusing on how unfair life is and how this or that is to blame (“it’s definitely the Governments fault”), where possible, it is best to seek out any possible solutions. One genuine option is Rentvesting. This involves buying a property you can afford to buy and then renting where you want to live. The simple reality is, unless you have ridiculously generous parents, your first home will not be your ideal residence for life.
This is an option I pressed on my own children. Work out what you can afford, choose an area where you believe growth will likely occur (a whole other topic), buy it as soon as you have the deposit together and move in for at least 12 months. Then move to where you want to live and rent your investment property out to offset the costs of renting. Typically, where you WANT to live will cost more than what you can afford to buy but now, at least you are in the market.
And unless you can predict the exact cycles of the market (I certainly can’t), buy as soon as you can afford to. Any shortfall in income compared to the interest and expenses (rates, rental management, maintenance etc) are a deductible expense in your tax return. You are now negatively geared (it’s legal and really not a bad thing but again, that’s for another time). You will no longer be watching from the sidelines as the prices keep increasing, whilst you are slipping further and further behind in your quest to own property.
As the following article rightly points out, it’s not an ideal solution (The headline doesn’t do justice to the content.). But if living in your perfect home is not an option, it really is a pretty good alternative.