Could sacrifice be the key to getting into the housing market?

You want to get into real estate, but wonder whether you’ll ever manage to save a deposit, let alone pay off a mortgage. Maybe you’re wondering if it’s worth busting your butt at work to save some extra cash, or sacrificing some fun to plug up the weekend bank balance drain.

According to one real estate expert, adjusting expectations could be key to getting into property. Professor Richard Reed, Chair of Property and Real Estate at Deakin University’s Business School, argues that contemporary home buyers are expecting too much. “Today’s households are not willing to sacrifice. They spend substantial money on eating out, travel and the purchase of a new tablet or wide-screen TV rather than saving for a housing deposit,” he says.

In some ways, this isn’t surprising: Gen Y is widely acknowledged to prioritise experiences over things, hence the spending on eating out and travel. And then there’s the matter of housing affordability (we’ll get to that in a moment).

But Professor Reed also claims that previous generations were satisfied with a smaller home, and were more likely to make the effort to get one.

Of course, there are examples of millennials who are willing to do whatever it takes to get into a home. Emma Lovell, a freelance marketing and PR consultant, is one such person. Now 29, Lovell moved in with her father in 2014 and stayed with him for two and a half years to help save a deposit.

Lovell also went without any new clothes or personal items for nine months, and took on extra work. “I did promotional work on weekends through agencies as extra cash – even dressing up once as a broccolini,” she says. “And I started a pet-sitting business. I was living in other people’s homes and caring for their pets – so pretty much rent and bill free. It’s a lot of moving around but it was great additional income.”

On her income of around AUD$70,000 per annum, Lovell saved a deposit in 15 months. With the help of some government grants, she purchased her home in Hervey Bay, on Queensland’s Fraser Coast, 18 months after seriously committing to her savings plan.

Moving to Hervey Bay from Sydney meant Lovell could buy a four-bedroom home for AUD$330,000. She acknowledges that Sydney real estate was not an option. “I knew the only way I could get in on the property market was to buy in Tasmania or Queensland and make the move,” she says.

Professor Reed also recognises that housing affordability is a multi-faceted phenomenon. Many variables, like median house prices and interest rates, are beyond your control.

No matter how many times you forego a latte, boutique beer or smashed avo on toast, it might not be enough for a deposit on an average home in Sydney or Melbourne. According to the Australian Bureau of Statistics (ABS), the mean price of dwellings in Australia is now AUD$656,800. New South Wales boasts the highest mean price, at AUD$864,900. Tasmania remains the most affordable, with a mean of AUD$343,900.

And with housing prices continuing to rise, buying property is getting harder, especially in capital cities. ABS figures show that residential property prices rose 4.1% in the December quarter 2016, the strongest growth since the June 2015 quarter. Melbourne recorded the highest annual growth at 10.8%, followed by Sydney at 10.3%.

In addition to housing prices, Reed notes that the current generation of home buyers face a different financial environment. “They have new financial pressures such as mobile phones and IT costs that were not part of life for previous generations,” he says. “These additional expenses, and reluctance to make lifestyle changes, leave less in the household budget to allocate to housing.”

There are other additional expenses to consider when buying a home, such as mortgage insurance, government duties and conveyancing costs. Be sure to factor all these into your savings plan.

For Lovell, who’d dreamed of buying property since her university days, making some sacrifices to buy her first home was worth it. Having made a start on the property ladder, she plans to buy more real estate and develop a diverse portfolio.

And her advice to potential home buyers: “Don’t give up on your dream of owning a home, but do give up on your ‘dream home’. You are not necessarily going to have the home you always wanted the first time. Buy in a good area, where you can afford the mortgage and make it work for you. If it means moving to get on the ladder, make the sacrifice. You may find it was what you wanted all along!”.

If you have a good strategy in place, getting into the property market early can put you on the right track to securing long-term wealth.

Making the decision to buy or not to buy can be complex, so it’s important to talk to a financial adviser or mortgage broker before you take the plunge.
Speak with us to find out more about owning a property that suits your financial goals. Get in touch with us at (08) 8211 7180 or at

Article reproduced from TheCusp
by Sophia Auld

Centra Wealth Group
Take The Next Step, Book an Appointment
Contact Us

Zac Zacharia (Managing Director) has been assisting clients to create wealth and secure their futures for over 14 years.

He is also an accomplished presenter and educator

Co-authoring the popular investment book, Property vs Shares.