How to enter the Australian housing market in 2022

The property market being “too expensive to buy into” is not a new concept. It was the same six years ago; the same 20 years ago and the same in the late 1980s too.

FOMO, which stands for fear of missing out, has become a familiar term in recent years as people have rushed to get a piece of the rising house market before prices grow out of their reach.

And you can understand their frustration. In a low interest rate environment, it’s a great time to be paying down a mortgage, but it’s very difficult to get one if you don’t have one already. The low interest rates that make it easier to pay down debt, are the same low rates that make it take forever to accumulate any decent savings for a deposit. And then you add a nationwide boom to the mix, with 20% plus growth in values in just one year and the goalposts keep shifting further away.

Accelerated growth

Growth of 20% plus isn’t out of the ordinary, but the Covid lockdowns and stimulus, in partnership with the historic low interest rates, essentially meant we saw a whole growth cycle condensed into 18 months. That growth period may have normally taken three or four years, but it all happened at once as people put all their spare money into property.

Always opportunities

As more listings begin to come onto the market and confidence takes a hit as speculation of interest rate rises begins to grow, there will be more opportunities to get into the market for a bargain price.

More supply will come on and some of the demand will dry up, which automatically equals less pressure on price. But apart from this, there are always opportunities if you know where to find them.

And not everyone does. It takes a lot of groundwork, research and talking to agents all over the country to let them know you are serious about making a deal.

Or, you could talk to someone who has already done all that groundwork, like b Invested founder Nathan Birch.

What’s Nathan looking at?

At the same time as prices have grown, the cost of building materials and renovations have gone through the roof. Nathan has been looking at opportunities where he can buy an investment property for less than the cost of building it on the same block. When the materials and the land they are on are more expensive than the asking price for the home, it’s a decent deal most of the time.

But not everyone has the means and motivation to think this way, so they need a different way into the market.

You may not have considered…

A new report from the Australian Housing and Research Institute found large numbers of Aussie households had very little capacity to save any money once regular expenses were accounted for. So first home buyers may feel the situation is hopeless. But there are a couple of unusual options that may not have occurred to you.

The first is to rent to own. There is growing demand for this option, which involves the seller helping the buyer by allowing them to rent their property until they build up the equity to buy it.

The rent they pay, in the meantime, counts against their future repayments. The problem is that in a hot market, good luck finding a seller that will sacrifice a higher price to do you a favour.

The next option is a joint venture. Combining funds with friends could mean you can buy a property with upside for growth and all get a chance to leverage into that equity. You may earn enough to buy separately later down the track. If you do this, make sure there are sound legal contracts in place to keep everyone honest. It’s amazing how quickly handshake agreements are forgotten when there’s money at stake.

To watch the full podcast episode on ‘What Would Nathan Birch Do Differently If He Started Over In 2022?’, click below.

Watch The Podcast Episode


Please visit the following sites for more information:

Price boom puts ownership out of reach

4 tips to get into the market


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