How you can work around Australia’s housing affordability crisis

It’s a difficult time for Australian home buyers – but there are ways forward. Demographia recently named Australia as one of the hardest places to buy real estate in the world, alongside New Zealand and China in the top three.

However, this paints the country with a broad brush – here is some perspective on the result.

Sydney and Melbourne aren’t the entire country

Price pressures in Sydney and Melbourne have been meteoric – there’s no way around that. But these hot spots aren’t the whole country. The idea of a national housing market is confused somewhat when you look at each state and territory capital on its own terms.

For example – in CoreLogic RP Data’s latest monthly indices, both Perth and Darwin had falling median values on an annual basis. Brisbane’s median value of $536,200 was less than half that in Sydney, while Hobart has a median of only $386,000.

However, that’s small comfort to the people who already live in Sydney or Melbourne and don’t want to leave. That’s why we’re working to help people find new strategies to enter the market.

Making the most of market difficulty

Research from CoreLogic indicated that while people didn’t want to move away from their locality, they would change their goals in terms of a property’s size or features to enter the market. This suggests looking at units instead of houses could be one way to get a foothold. The monthly indices show that in Melbourne, the median unit value is just below $550,000 compared to nearly $900,000 for a house – a difference that tracks across all major centres.

Buyers can also deal with affordability by thinking a little outside the box in terms of their home loan. Using guarantors (often parents) for a parent equity home loan requires a degree of trust between all related parties, but is an excellent way for people to help each other buy property.

Finding a bank that can help you with loans at higher loan-to-value ratios could also be useful, as long as you have thought about your ability to pay higher interest rates. Buying off-the-plan, making full use of government grants and even building from the ground up could be useful ways of getting on the ladder.

Before you go too far into your planning though, you have to make sure your finances are in order. That’s where the team at Beyond Bank can help. If you’re unsure about your ability to buy property, we’ll help you find a way.