How to get a new house for less than $300,000
In a town where the average price of a home has doubled in a decade, many locals are starting to worry about the affordability of their homes.
The cost of a typical new house has doubled since 2010, from $500,000 to $1.1 million.
This is despite a global glut of cheap and cheerful housing and the booming population.
Many homeowners have lost their jobs or are facing a housing shortage.
But the biggest fear is that the cost of owning a house could soon double again.
That is because the global economy has entered a ‘peak bubble’, which is the point at which the market becomes so volatile that prices could go up at a rate of almost 100 per cent a year.
The key to avoiding a bubble is to build a solid portfolio of properties with high rents, which is why investors and investors are now turning to the property market.
“You’ve got to have a solid balance of assets that can pay off at a reasonable rate of return, with a reasonable risk,” says Dr Michael Huggins, chief executive of the property consultancy firm Property Insight.
“I think the biggest thing is to look at what is really affordable for your family and what you can afford to pay for, and if you can pay for that, you’re in a position to make a lot of money.”
The key factor to a good portfolio of property is your age, and for the average family this means a home worth between $150,000 and $180,000.
Dr Huggs points out that for people over 60, the average house is currently worth between half a million and one million dollars.
However, for the younger generation, this will become more achievable.
“The average age is now between 35 and 50, which means the value of a property is going to increase,” Dr Huggleins says.
“If you can get into a property in your late 30s and into your early 40s, it will become much more affordable.”
The market is also getting cheaper, thanks to China’s economic growth, which has lifted its housing prices, especially in Sydney, Melbourne and Brisbane.
“In the last 12 months, we’ve seen a lot more affordable homes being built and we’re seeing more houses going up for sale,” Dr John Goulston, a senior research analyst with property agency ASX-listed property company Property Central, says.
But it will take some time before these properties can be built.
“There is a significant cost to the cost structure that’s being built,” Dr Goulson says.
This means buyers are being forced to spend more money on the property than the owner would normally have to pay.
The number of properties available to buy is also growing, with the average cost of buying a house in Sydney rising from $2.9 million to $3.3 million between 2013 and 2019, according to Property Insight, compared to $2 million and $2,600 for Melbourne, Perth and Adelaide.
“It’s going to be difficult for those families to afford to buy a property,” Dr Hailey says.
If you are not keen on renting, there are plenty of other options available to make your property more affordable.
“We have the rental market, but we also have a whole bunch of other people wanting to live in the area, and there’s lots of competition for the market,” Dr Wrigley says.
The latest figures from the Australian Property Market Show that rents have fallen from more than a quarter of the market in 2010 to just 2.4 per cent in 2017, which puts Sydney at the bottom of the league for the lowest cost of living.
“With the global economic crisis, prices have been on the rise, but there is a lot that people are going to have to change,” Dr Peter Wright, a Sydney real estate agent, says, referring to the fact that the global financial crisis has created an “economic boom”.
“There are plenty more people coming into the market to get their feet wet in the market, so there is room for everyone,” he says.
With prices increasing so fast, there is more demand for properties, but this demand has a huge impact on the cost to rent.
In Sydney, for example, the median price of rental property is now $1,350 a week, up from $1 million a year ago.
“Rent is a big part of what makes a home affordable, so it’s important to keep the price affordable for the person that wants to buy it,” Dr Wright says.
While there is plenty of new housing being built around Sydney, there may be more to come.
Dr Wright also points out there are some areas of Sydney that are becoming increasingly unaffordable.
“When you think about the size of the city, you would expect there to be more affordable housing, but that is not the case,” he explains.
The most expensive housing in Sydney is in the city’s east.
It costs between $3