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Buying a property may be a smart move, particularly if prices and interest rates are low. If you are worried about how you could own a place of your own, buying with a friend may be one way to become a home owner.
House prices, uncertainty in the economy, and tighter lending standards may make it a significant challenge to enter the housing market.
Even falling property prices and Reserve Bank of Australia interest rates at a record low of 0.75%1 may leave owning a home out of reach for many.
Saving a 20% deposit to buy property alone may sound intimidating.
But the traditional model of home ownership may be changing, and one of option is buying property with a friend.
While the Australian dream of home ownership remains alive and well, housing affordability may present a barrier for many who are trying to save for a home deposit.
Brisbane property prices rose during the December 2019 quarter,2 with the median house price at $577,664. Brisbane units fell 3.4% with the median unit price $377,549.
Brisbane median house price growth is forecast to average 6.4% per annum over the next three years, taking the median house price to $660,000 in June 2022.3
Sydney and Melbourne have continued to rebound.2 House prices in Sydney jumped 5.7% in the December quarter, placing the Sydney median house price at $1.142 million. In Melbourne, the house price jumped 5% to a median house price of $902,000.
Nearly one in five Australians surveyed by CoreLogic in 2017 (17%) said they would consider buying a property with friends or family.4
However, while still looking to share the costs of home ownership in order to enter the market, the 2019 CoreLogic report5 found it was largely the “bank of mum and dad” that young people were turning to.
Whether it is with family or friends, it is worth considering the pitfalls as well as positives regarding co-ownership.
Some of the risks of joint ownership that you should consider before becoming a home buyer include the long-term implications:
It may be helpful to answer these questions before committing to a joint loan.
Take control of your finances with the support of financial advice.
1. Reserve Bank of Australia, 6 November 2019, accessed 20 November 2019 at https://www.rba.gov.au/statistics/cash-rate/
2. Domain, December 2019, Domain House Price Report, accessed 20 February 2020 at www.domain.com.au/research/house-price-report/december-2019/
3. BIS Oxford Economics for QBE Lenders’ Mortgage Insurance, 2019, The QBE Australian Housing Outlook 2019-2022, accessed 15 November 2019 at www.qbe.com
4. CoreLogic, May 2017, Perceptions of Housing Affordability, accessed 15 November 2019 at www.corelogic.com.au/resources/pdf/reports/housing-affordability/2017-05-CoreLogicHousingAffordabilityReport_May2017.pdf?language_id=1
5 .Media Release, 27 September 2019, CoreLogic Releases Latest Findings On Consumer Attitudes Towards Housing Affordability, Perceptions of Housing Affordability, at www.corelogic.com.au
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