Rising and heady house prices is to blame for making buying property financially challenging these days, particularly if you’re a single woman.
After the global financial crisis many lenders pulled back on their loan to value ratios and some even required a minimum 20 per cent deposit before a loan would be approved.
We did seem to be on the path to a mid point on lending but with the low interest rates investors really owned the market.
Then in 2015 and 2016, the market regulators stepped in to further pull back lending policies and, more importantly for those trying to get into their own home, they pulled back on how they assessed what could be borrowed.
To further add to this difficult period we also had property prices soar.
No wonder many feel they have been left behind and no one more so than single people on a single income and with a single savings capacity.
Being single doesn’t mean you’re shut out of the housing market though, it just means you need to think differently about how you go about getting into the property market.
Here’s some ways single people can get into property:
- Consider lowering your expectations and live where you can afford to live, not where you want to live. You may not find smashed avocados on the local menu but you will have a patch of dirt you own
- Sometimes your borrowing capacity is higher as an investor, I personally rented whilst I invested, only staying on properties long enough to do a quick renovation before renting them out. So live where you want to live but still have your money working for you.
- Buy with a friend or family member
- Ask your folks to help out, even organise a loan agreement with them so you do have to pay them back one day, or look at a guaranteed loan – you will still have to qualify with the lenders based on your income to the size of the loan though
- Maybe buy with other investors through a property investment trust
- Try one of the new crowd funding platforms like Brickx.
The housing market is where most Australian’s park their money, and the reality is that because it is ‘as safe as houses’, with a relatively low contribution you can control a much larger asset.
A $40,000 investment allows you to own a $400,000 property, and 10 per cent growth on $400,000 is a lot more than 10 per cent growth on $40,000.
It is this leverage that allows you to grow your wealth, and for the fortunate this can be done with their own home.
For those who can’t afford to buy where they want to live they can still buy in, maybe just not in their preferred location.
To listen to a recent interview with Financy’s editor Bianca Hartge-Hazelman on buying property, check out the audio file below.