While it’s widely believed that Australians love property investment and homeownership in general, new research suggests that there are several underlying fears deterring them from taking the leap.
So, what exactly is making us so anxious?
Let’s take a look at a recent study and discuss several of these fears, and where they are deriving from.
But firstly, it’s interesting to note that a Galaxy Research survey discovered that approximately:
- 65% of Aussies are concerned that their financial outlay may not warrant the potential return/gains.
- 35% of people surveyed agreed that establishing a deposit is just all too hard.
- 33% were worried about carrying the enormous debt incurred, and
- 23% agreed that buying an investment property in the same location as where they are living is way too expensive.
CoreLogic can tell you that Australia has 2.6million properties owned by investors, which averages out to around one investment property for every owner.
However, the numbers remain pretty stagnate which in some expert’s opinions is understandable.
The anxiety derives off the back of the fact that rising house prices and the cost of living has far outrun the pace of wage increases.
It’s no surprise that 74% of Gen Xer’s would love to own an investment property, with 21% saying that being approved for a loan is more difficult than ever before with more stringent lending policies.
Lending value for investors is on the decline, currently sitting at around 15% lower than its recent pinnacle causing property investment in Australia to come to a screeching halt.
Also, with these tightened lending policies comes higher interest rates for investors, with rates of over 50 basis points above owner-occupier loans.
The bottom line is that a lot of the fear is driven by the uncertainty and unpredictability among mortgage rates in Australia.
But how about we shed some light on how to overcome or deal with the top four fears among potential property investors in Australia.
- It’s going to take me too long to build a deposit.
Just remember that you don’t necessarily have to come up with a 100% cash deposit. Take advantage of your existing home’s equity, borrow some cash from a family member or use some other form of collateral as a contribution.
- I’m scared to have all that debt.
Something that you need to learn very quickly in this game is that there is good debt and there is bad debt. Once you’re able to distinguish between the two and realise why some debt types are actually advantageous to have, the sooner you’ll start to feel more comfortable with having ‘productive debt’.
- My area is too expensive to buy an investment property in.
Who says you have to buy a property where you live? Or even close to your home town? Think a little more outside the box, put in some hard research time and you’ll definitely be able to find something affordable in other locations.
- Securing a loan is so difficult.
Get in touch with a reputable mortgage broker and let them work their magic. They are the professionals in this situation and you may just be surprised at how good they are at their jobs!