Buying property: how to start climbing the ladder before 30

Stepping up to property ownership seems increasingly challenging for young adults, but experts say there are strategies to help.

Soaring property prices, crowded auctions and stricter banks have made finding a first home seem like running into a brick wall, but young adults are being urged not to give up trying to scale it.

Housing and mortgage specialists say people aged in their twenties can still get a on the property ladder, although they may have to change their thinking.

Turner Real Estate managing director Lachlan Turner says a first home should really just be a stepping stone rather than a dream property.

“The most important thing is to take action and get your foot in the real estate market,” he says.

People can consider renting a place to live while making their first property purchase an investment in a more affordable area, Turner says.

“Mindset is key,” he says. “It is critical to have the mindset that owning property is an achievable goal and more importantly, believing in the value of owning property as a worthwhile investment.”

Aus Property Professionals director Lloyd Edge says increasing investor activity has been a barrier for young buyers. If you can’t beat them, perhaps join them.

“You would be better off getting an investment in a country town where you might only need $400,000, plus it’s got rent coming in,” Edge says.

“That will get you onto the property ladder for a lot less expense.”

GOVERNMENT INCENTIVES

Becoming a property investor can mean missing out on government homeowner grants and the First Home Loan Deposit Scheme, which helps people buy property with just a 5 per cent deposit rather than the usual 20 per cent. So it’s wise to crunch the numbers first.

There’s also a government First Home Super Saver Scheme that enables people to save deposits up to $50,000 within the low-tax superannuation environment.

Alice Carey has been trying to get into the housing market. Picture: Naomi Jellicoe

Alice Carey, 24, has spent months trying to buy a home without success, and fears she will soon lose her loan pre-approval and First Home Loan Deposit Scheme approval.

“I’ve been to heaps of open inspections, usually taking over my whole weekend, and I’ve put in multiple offers,” she says.

“Some properties are on the market for such a short amount of time, there’s barely enough time to think too much about your offer. It’s a lot of pressure.”

BANK OF MUM AND DAD

Family financial help is expected to become more common as property price rises make older homeowners richer.

WLTH co-founder and CEO Brodie Haupt says people with limited deposits are finding “their dream home is increasingly drifting further away than their borrowing capacity allows”.

“For the lucky ones, parents and family can act as a guarantor for the loan, effectively securing your deposit against the equity in their own property,” he says.

“Alternatively, gifts from grandparents are becoming increasingly more prominent.

“For those not as fortunate, understand your position and save, save, save. Even add an additional job or hobby income to realise the dream sooner.”

TEACH YOURSELF

Edge says because of the unpredictable and fast-growing property market, it may be worthwhile looking a properties $100,000-$150,000 below your borrowing capacity to avoid disappointment when bidding surges.

“Look at what’s sold over the past few weeks, not the past few months,” he says.

“Attend auctions and watch what’s happening in the local market. Have your finance in place because things move so quickly.”

FRACTIONAL INVESTING

You can get real estate exposure without spending big bucks by buying small slices of investment properties – and sharing in their costs, income and growth – through platforms such as BrickX and DomaCom.

“It could potentially work but like any business it’s set up to make someone money,” Edge says. “Do your research.”

Turner Real Estate’s Lachlan Turner says use a first home as a stepping stone.

TIPS FOR TWENTY-SOMETHINGS

• Save at least 10 per cent of your income to show lenders your discipline.

• Speak with a mortgage broker and work out your borrowing pathway.

• Educate yourself about the housing market and make yourself known to local real estate agents, who may share new opportunities.

• Get loan pre-approval to be able to bid with confidence.

• Don’t become emotionally attached – another property may be just around the corner.

Source: Turner Real Estate, WLTH

Originally published as Buying property: how to start climbing the ladder before 30