Top 4 tips for dealing with property price growth

Do you feel like home ownership is too far out of reach? If you do, constant news of property price growth may come as an unwelcome intrusion every time you open up the newspaper or switch on the TV. However, we’re here to tell you that it’s not all doom and gloom, there are ways you can deal with property price growth, both mentally and practically, to get ahead.

1. Change your mind(set)

No, we’re not suggesting you give up on your home ownership dreams. But what you can do is change from being reactive to being proactive. Instead of flinching every time someone mentions capital growth, why not start doing some research on how to maximise value for your own one-day property? By seeing property value growth as a positive thing for your future self, you might feel less disillusioned on a daily basis.

2. Change your destination

This can be a tough one. If you’ve been hanging out for an affordable four-bedroom home in Sydney’s middle suburbs, you’ve got a long wait ahead of you. However, you can either change the physical location you’d like to live in, or the type of property you want to buy. This simple (but sometimes tough) step could halve your purchase price. As a standout example, a unit for sale in Sydney has an average asking price that is almost have that of a free-standing house, according to SQM Research.

Still want a big house in a big city? According to the same data you could save almost $400,000 by buying an average house in Melbourne instead of Sydney. If you really want to save on the dollars, Adelaide is often touted as the mainland’s most affordable capital – and with good reason. Not only is it the cheapest capital city aside from Hobart to buy a house or unit in, but a free-standing home will cost you less in Adelaide than the national average for an attached unit. Not bad!

3. Increase affordability with math

You may not believe it, but you can make your house more affordable by simply doing some creative math with a home loan calculator and some trusted advice.

The historically low cash rate at the moment has helped to keep interest rates down, and this in itself means the cost of property ownership has decreased. In fact, Malcolm Gunning, president of the Real Estate Institute of New South Wales put it this way in a March 3 statement:

“It is really amazing times because the low interest rates mean that property has never been more affordable despite the high prices.” 

However, you don’t just need to rely on the banks to do their bit. You can be proactive in your home loan comparison, talking to more than a few lenders, including non-bank suppliers, and taking them to task on the rates and features they offer. Remember to take advantage of added bonuses like offset accounts, which can reduce the amount of interest you pay.

4. Become a property mogul

Well, why not? While a four bedroom family home in the suburbs might be out of reach, a small unit to rent out could be well within your reach. While you may still be renting, at least you’ll be gaining some capital appreciation on your investment. There are also two great things to remember:

• 4.1 Leverage is a great thing. With a 10 per cent deposit, you can benefit from the growth of 100 per cent of a property’s value. This is why brick and mortar makes a solid foundation for a wealth-generating investment portfolio in the long term.
• 4.2 As Australia grows at a rapid pace, units and apartments are becoming more desirable. At the moment they are appreciating in value quicker than houses in a lot of markets. In fact, looking at the figures from SQM Research, while houses in the capital cities appreciated by an average of 4.3 per cent over the last 12 months, units climber up 5.2 per cent over the same period.

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