First Home Buyers Case Study

Is property out of reach for young people living in Sydney? There’s obviously much discussion about this as prices skyrocket putting the dream of home ownership out of reach for most young First Home Buyers. When the going gets tough the tough get going so let’s take a look at one young couple thinking outside the box who are beginning their journey but starting the race in the slow lane. Let’s see how this can be the way to go for other young people aspiring to join in on this proven wealth creation strategy…

There is no denying that property in Sydney is out of reach for most people who aren’t earning incomes in the mid to top brackets. On top of this discretionary spending is more prevalent amongst Gen Y and MIllenials. I’ve written about this in another blog about the price of burgers and how people these days are willing to pay for it right before they catch an Uber home to plan for their next overseas trip.

Trying to save for a property and living the lifestyle worthy of posting about on Instagram each day just isn’t going to work so you better scrap the FOMO attitude for a couple of years and start saving!

Getting back to the point of this blog, if it’s out of reach today to buy property in Sydney, then let’s turn back the clock to when it was. In 1997 the median house price in Sydney was $232,000 (NSW VG / Department of Housing Data). If you can afford a property in this price bracket and your first home doesn’t have to be your dream home then it’s not so much of a mountain to climb.

First Home Buyers. You’re not going to find a place that cheap in Sydney!

My clients Lachy and Saige understand this and they are stoked to be starting their journey this year by purchasing a modest home in Tamworth. Lachy hails from Tamworth so he has some local knowledge of the area which is a big help. The place needs some work so they are moving in and will be fixing up the place over the first year on weekends while still working in Sydney during the week. Because they will be living in this property for at least the first year they were eligible for the First Home Buyers benefits and saved 7k on stamp duty.

You can still get into an owner occupied property with a 5% deposit so $10,000 was all they needed to save. Repayments on the loan will be $954 per month which is really affordable. They plan to pay over and above on this and when they have enough equity they plan to buy their next property.

Capital growth in Tamworth is not what you would expect from a property in Sydney but they are taking advantage of minimal repayments to help them save for property 2 which is also an effective strategy.

Another thing you can do if you have parents who are happy to help out is ask them to go guarantor on your home loan. If they have an appropriate property of their own to offer up as security then you can avoid paying mortgage insurance on your purchase.

Family Pledge or Guarantor loans are a whole other topic which I’ll explain in my next blog but in the meantime, if you have any questions just email me or book an appointment for an initial consultation to see how far off your first home purchase is. I’m looking forward to adding you to my long list of happy clients!