THETELEGRAPH.COM.

AU SUNDAY FEBRUARY 23 2014

LIFESTYLE 73

SPECIAL REPORT

PROPERTY LADDER
YOUR GUIDE TO BUYING AND INVESTING

NEW WAYS TO BUY YOUR FIRST HOME TOP TIPS FOR UPSIZING

WEVE HELPED MORE PEOPLE IN NSW BUY THEIR OWN HOME THAN ANY OTHER BANK.

Talk to a lending expert or visit commbank.com.au/home

Things to know before you Can: Applications are subject to credit approval. Commonwealth Bank of Australia ABN 48 123 123 124. Australian credit licence 234945.
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74 NEWS

SUNDAY FEBRUARY 23 2014 THETELEGRAPH.COM.AU

PROPERTY LADDER

Data confirms market still not beyond reach of first-home buyers, Caroline James writes

ODAYS first home buyers are finding creative ways to step on the property ladder. Contradicting views that last years end of first-home buyer grants for established homes makes it almost impossible to enter the market, Commonwealth Bank general manager of home loans Clive van Horen said it is absolutely still possible for first-time home buyers to invest. Latest data from the Australian Bureau of Statistics (ABS) does confirm first-home loans as a proportion of all owner occupier finance commitments are at a record low level. However, Cameron Kusher, national research director Australias biggest real estate statistics provider RP Data, doesnt believe that is because first-home buyers cannot afford to buy. Looking at sales throughout 2013, 27.1 per cent of capital city house sales and 39.4 per cent of capital city unit sales were below $400,000. So even in cities viewed as being unaffordable, opportunities still abound, Mr Kusher said. He said data also confirmed most first home purchases were new dwellings in the past 12 months in line with most states first-home grants now only being offered for new homes. It is reasonable to expect these first home buyers are buying relatively more affordable new housing stock, be it a detached house in a greenfield development or a unit (in) the city within a brand-new development, he said. New trends in first-home borrowing are also emerging, according to Mr van Horen, including property shares where multiple buyers often friends get individual home loans for their portions of a jointly owned property. Loans backed by guarantors support, where a borrowers parents offers their home as extra security is another increasingly popular borrowing option. Another

DREAM WITHIN REACH

strategy is borrowing to buy a first property the borrower will not live in. Dubbed the rentvestors, some first-home buyers are opting to buy rental homes, either staying at home or renting elsewhere. There are signs in 2014 that first-home buyer activity is growing; there are still ways to buy a first property, you just have to think creatively, Mr van Horen said. KPMG partner and demographer Bernard Salt agrees, refuting the idea first home buyers are not really in the market. This was at odds with the number of people agedbetween 25-35 in

Even in cities viewed as being unaffordable, opportunities still abound

CAMERON KUSHER

Australiatoday. Gen Y are the children of the baby boomers and there is a bucket of them, Mr Salt said. The simple fact is they will have to move out of home eventually so there is much pent up demand and momentum for change. Asked to comment on what

first-home buyers are purchasing in 2014, Real Estate Institute of Australia president Peter Bushby said affordability varied wildly between Australian states making it impossible to generalise. In Tasmania it is still possible to buy quite reasonable houses in the city for affordable prices, Mr Bushby said. Of course in Sydney, with prices and competition from investor buyers making it much harder for first-home buyers, most are wanting inner apartments near city attractions, rail links, and with little or even no yard.

THE TOP 10 SUBURBS

AFFORDABILITY is a major factor for buyers aged 25 to 35, particularly those looking to get into their first home. The suburbs below are great spots to get a foot on the property ladder, with median sale prices ranging from $365,000 for a house in St Marys to $571,000 for a Merrylands house. But theyre not in our top 10 just for their affordability. Theyve also recorded solid price growth over the past year. Units are the way to go if youre in Parramatta, Dee Why or Meadowbank, while the remaining seven suburbs offer top house buys. 1. MT DRUITT 2. PARRAMATTA 3. PENRITH 4. LIVERPOOL 5. ST MARYS 6. SEVEN HILLS 7. ST CLAIR 8. MERRYLANDS 9. DEE WHY 10. MEADOWBANK Source Commonwealth Bank and RP Data

$1,000 CASHBACK
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ON YOUR FIRST HOME LOAN? COMMBANK CAN.

THETELEGRAPH.COM.AU SUNDAY FEBRUARY 23 2014

LIFESTYLE 75
BROUGHT TO YOU BY

LIFE STAGE

25-35 YEARS
TOP TIPS FOR BUYING YOUR FIRST HOME

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Sarah Hollinshead and Mitchell Smith purchased a townhouse in St Marys last week. Picture: Cameron Richardson

START SAVING If you saved $100a week, itmight seem insignificant today but over time will become a healthy deposit on your first piece of real estate. HAVE A BUDGET Knowing how much you can afford to spend on your first home will save much time and frustration inspecting homes beyond your means. DONT FORGET THEEXTRAS Make sure to tally all purchase costs including stamp duty, legal fees, pest and building inspections, insurance and moving costs. These can quickly add another 5 per cent to your homes purchase cost.

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They bought a threebedroom townhouse at 1/2 Warramunga St in St Marys last week for $326,500. It was purchased through Professionals Penrith and had a ready tenant. The pair tried to educate themselves in real estate, reading about investments, hot spots and watching properties online, trying to predict sale prices and gain an idea of how to secure their investment property. We initially did our research on the area and St Marys looked like a suburb that was on the up, meaning we could make some profit off the property in years to come, Miss Hollinshead said. It was difficult finding the right place. Because there are older, more knowledgeable people buying, who have bought properties before, they know what they are doing and what to expect. We had no idea of how much to offer and what was required in the process, so we found it challenging to find the right property. The townhouse was marketed at offers over $300,000 and for the couple, who both work full-time, that price fit their budget. They planned to spend less than $320,000 but were forced to raise the price when two interested parties had already made offers above $310,000. Despite their challenges, the end result was a welcome reward. It allowed us to get a foot in the door. And then add to that having tenants to assist with paying off the mortgage, it lets us live our lives while still owning a property, Miss Hollinshead said. In another five years when were looking to buy again, we will know more about what to do and how to approach it from the experience this time.
MARISSA GEORGOPOULOS

ROOM TO MOVE 5
DETERMINED to break into the property market, Sarah Hollinshead and partner Mitchell Smith of Sydney have purchased an investment property in the booming west. The couple, from the Fairfield area, are both 24 and live with their parents. They have regularly travelled overseas since 2010 but put their love of travel on hold for about a year to save a home deposit. And their property dream came true last week.

GET PREAPPROVED BEFORE HOME SHOPPING Loan pre-approval up to a certain amount stops you buying property you wont be able to finance and it reduces the disappointment of getting attached to a home beyond your reach. It also boosts buyer confidence in negotiations and removes the need for a conditional contract, which vendors love. STUDY THE MARKET Work out where you want to buy and what you can afford. Hit the streets to research suitable properties in your preferred locations and study comparable sales to get a feel for prices.

HOLD YOURNERVE It is easy to fall in love with your first property and end up paying more than you budgeted (then find you cannot afford it). Dont. Stick to your guns and the right home at the right price will come along.

Now you can get a helping hand from CommBank, with a $1,000 cashback for a limited time. Apply by 31 March 2014; fund by 30 June 2014 (for construction loans first progress payment made by 29 September 2014). Minimum loan size $100,000. Maximum loan to valuation ratio 90%. *

Ask us how you can qualify today.

Talk to a lending expert or visit commbank.com.au/firsthome

Things to know before you Can: *After capitalisation of any lenders mortgage insurance or low deposit premium. The Home Loan or Line of Credit applied for must be the rst loan that any applicant has had to purchase or construct a residential property for owner-occupied or investment purposes, except where the prior loan was for the purchase of vacant land only. Home Seeker Loan applications made before 20 January 2014 are also eligible for the cashback offer. Payment of the $1,000 cashback will be paid only to a Commonwealth Bank Transaction Account within four weeks of the loan funding/rst progress payment. Applications are subject to credit approval. Full terms and conditions are included in the Loan Offer. Fees and charges are payable. Commonwealth Bank of Australia ABN 48 123 123 124. Australian credit licence 234945.
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SUNDAY FEBRUARY 23 2014 THETELEGRAPH.COM.AU

PROPERTY LADDER

ITS BACK TO BASICS

H
Buying a second or third home it never gets any easier, reports Caroline James.
OMEOWNERS usually reach a point when they outgrow first homes and need to upgrade. You have done it all before, right? How hard can it be? According to experts, buying a second or even third home can often be as fraught as buying the first one. Buying your next home can be a daunting task, its extremely exciting but full of complexities, said property expert Michael Yardney, of Metropole Property Strategists. One of my best tips no matter where you are buying is do not be influenced by the market more than by your own needs. Waiting for the right time or for prices to go down is gambling with your familys future. Fortunately with careful planning, understanding what you can afford and knowing how to sell and buy, upgrading homes can be hugely rewarding. RP Data national research director Cameron Kusher said upgrading homeowners were one of the most active cohorts of buyers this year. Commonwealth Bank head of home loans Clive van Horen agreed upgrading homeowners were a big portion of the total borrowing market this year. Second- and third-time home buyers are a very strong segment, just behind the investors, and approaching this move in different ways, Mr van Horen said. Some are

upsizing by selling to buy bigger homes, some are topping up existing home loans to renovate or extend, some are downsizing to buy in preferred locations. Mr Kusher said the most important thing to keep in mind if upgrading in todays market was that mortgage rates were at record lows. At some point in the future they will increase, he said. Also keep in mind that the current and historic levels of capital growth in the housing market are not guaranteed to continue. If thinking of upgrading, the questions to ask yourself are:

HOW much equity do you have in your current home? HAS my financial situation improved since my previous purchase? HOW have broader market values changed? WILL I be buying and selling in the same market? Ideal family home suburbs have good education facilities including primary and secondary schools and kindergartens, proximity to sports facilities and shopping, according to Real Estate Institute of Australia president Peter Bushby. My advice is always buy where it suits your family in

the best location you can afford, Mr Bushby said. The question of whether a homeowner should sell or buy first draws mixed responses from industry experts. Whether you can afford to buy first or have to sell first will come down to your financial position, Mr Bushby said. But if you havent got capacity to buy before selling, your outlook is fairly difficult. Mr Yardney disagreed, saying most people were better to sell first. You can then purchase your dream home with confidence and dont feel rushed to make a purchasing decision.

THE TOP 10 SUBURBS

WITH equity built up in their existing home, buyers aged 35 to 55 generally have a bit more cash to splash. Houses with room for the kids are usually at the top of their list and the suburbs below offer great family house buys across Sydney. Most have median sale prices in the $600,000 to $700,000 range. Richmond is at the most affordable end, with a median price of $435,000, while West Ryde is the most expensive option with its $891,750 median price. These suburbs have also recorded strong price growth over the past year. 1. RIVERSTONE 2. RICHMOND 3. WEST RYDE 4. WINSTON HILLS 5. BAULKHAM HILLS 6. PEMULWUY 7. HORNSBY 8. MT ANNAN 9. ROUSE HILL 10. WENTWORTHVILLE Source Commonwealth Bank and RP Data

WEVE HELPED MORE PEOPLE IN NSW BUY THEIR OWN HOME THAN ANY OTHER BANK.
Talk to a lending expert or visit commbank.com.au/home
Things to know before you Can: Applications are subject to credit approval. Commonwealth Bank of Australia ABN 48 123 123 124. Australian credit licence 234945.
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LIFE STAGE 35-55 YEARS

LIFESTYLE 77
BROUGHT TO YOU BY

MARYS MOVE COMES QUICKLY

THE decision to upgrade to a larger home was an easy one for Mary ORourke. Living in a townhouse, the mum of four yearned for a bigger backyard, a garden to potter in and more room to entertain. She is now happily living in a three bedroom house and in a few weeks will host 100 guests in the garden for her daughters engagement. Ms ORourke bought her West Ryde property for $840,000 last year through Tracy Yap Realty Epping.. When I walked down the driveway and saw the house and the yard, I said Ill take it, Ms ORourke said.I put in an offer and it was accepted. Price-wise it was really good, she said of the property thats on a 936sq m battle-axe block between Marsden High and Ermington Public Schools. Id started looking in Gladesville and everything there was more than a million. she said of the move to West Ryde. Ms ORourke had been living in a strata townhouse in Tennyson Pt for 18 months. The townhouse had a small courtyard out the front and a balcony out the back with a view. The view was nice but we didnt have any room to move. Ms ORourke said making the move further along Victoria Rd, away from the city, was initially a concern. However, her fears were unfounded. She often does the 40minute walk to the Rivercat at Meadowbank or, if in a rush, drives there in seven minutes. It takes her 15 minutes to drive to her work as a medical practice nurse in Auburn. And of course, shes is loving the extra room. Since moving Ive discovered my inner gardener and I didnt even know I had one, she laughed.

Mary O'Rouke at home in Winbourne St, West Ryde. Picture: PHILIP BLATCH

TOP TIPS FOR PAIN-FREE

UPGRADING

BACK TO THE BOOKS It is common for upgraders to suffer research complacency because they have done it all before. But poor research often results in poor purchase decisions. Instead, study todays markets in suburbs with suitable houses, comparing recent sale prices and trends data before signing on any dotted lines.

WHATS YOUR BUDGET Ask local real estate agents to appraise your home and/or get a bank valuation to get a sense of its value before shopping for your next purchase. This knowledge is invaluable in helping you work out how much you can afford to spend on your next property and how much your weekly mortgage repayments will change.

TALK TO YOUR BANK Aside from determining your borrowing power and getting pre-approved for your next loan, ask your lender about bridging finance if planning to upgrade before selling your current home.

BUY FIRST OR SELLFIRST? Which order to transact usually depends on the state of the market. When a market is growing increasing demand and decreasing supply it can be stressful to sell your current home before securing a suitable upgrade. To avoid sleepless nights, ask the vendor if they will accept a sale subject to the sale of your current home.

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78 LIFESTYLE

SUNDAY FEBRUARY 23 2014 THETELEGRAPH.COM.AU

PROPERTY LADDER

GREY POWER PLAY

REY investors are out in force across Australia today, keen to bring life to dead equity in their homes. Property investors including droves of retirees and soon-to-be retirees have been extremely active in 2013, reports RP Data national research director Cameron Kusher. As a proportion of all housing finance commitments, property investors were at their highest levels in December since late 2003. They have re-entered the market in a big way, chasing the types of returns which simply arent available currently across other asset classes, Mr Kusher said. More people these days are thinking they have dead equity in their homes, explained Chris Gray, host of Your Property Empire on Sky News Business. Our parents generation thought the goal was paying off their homes by retirement, then came the Baby Boomers who think that achieving full ownership of a $1million house by retirement is OK but they would rather refinance to leverage that equity to grow wealth. At the top of the over-55 investors wish list is well-located and rentable homes, although their purchasing means and goals vary. Some are investing with funds from super, some from selling

Baby Boomers are changing the face of the investment market, Caroline James writes
now-empty suburban nests to downsize and buy rental homes promising retirement income streams. All experts agree older investors must buy with clear objectives in mind and seek reputable advice before buying. Real Estate Institute of Australia president Peter Bushby encouraged retirees to steer clear of properties promising super high yields today but questionable longterm rental demand tomorrow. Instead buy in suburbs close to railway stations with established and ongoing demand and consistent population growth trends, he said. Ask yourself am I buying for long-term capital value gain and a reasonable rental income or chasing a premium rental yield but with more potential risk?, he suggested. There is no point buying in a mining town, for example, now in operational mode as there is no scope for future population and rental growth and if downsizing Id look for homes close to hospitals, public transport and low maintenance. Research commissioned by Commonwealth Bank reveals about 70 per cent of investors believe property prices are impacted by the fear of missing out. About half of those polled would pay above market value if they really want a property. Commonwealth Bank head of home loans Clive van Horen described this finding as worrying if the investor couldnt afford it. We all love a good financial deal and when investors believe they have found one, 30 per cent say they are driven to snap it up because they dont want to miss out (but) many investors arent sticking to their budget, with 48 per cent saying they paid more than they should have but they really liked the property, Mr van Horen said. Another mistake of retiree investors is only buying homes they would live in and ignoring what tenants expect. So much time has passed since they (retirees) went looking for a home that they are out of tune with what a good investment property looks like today, Mr Gray said. They go looking for investments only they would live in themselves, not what someone renting wants to live in, which is usually smaller, low-maintenance and near public transport and amenities.

TOP 10 SUBURBS
DOWNSIZING is on the agenda for many empty nesters aged 55-plus. And so is property investing. Having sold the family house and bought a smaller home, many are looking to channel surplus funds into affordable investment properties that can provide rental income as they head into retirement. The suburbs below offer houses or units that have returned healthy rental yields of between 4.7 and 6.6 per cent in the past 12months. Some, like Cessnock, Berkeley Vale and Katoomba, are further out of town and popular with downsizers for their lifestyle attributes. 1. MT DRUITT 2. LIVERPOOL 3. ST MARYS 4. CESSNOCK 5. BERKELEY VALE 6. NEWCASTLE 7. ROPES CROSSING 8. KATOOMBA 9. BLACKTOWN 10. HARRINGTON PARK Source Commonwealth Bank and RP Data

WEVE HELPED MORE PEOPLE IN NSW BUY A PROPERTY THAN ANY OTHER BANK.
Things to know before you Can: Applications are subject to credit approval. Commonwealth Bank of Australia ABN 48 123 123 124. Australian credit licence 234945.

Talk to a lending expert or visit commbank.com.au/buyaproperty

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LIFE STAGE 55+ YEARS

LIFESTYLE 79
BROUGHT TO YOU BY

WHAT TO ASK WHEN CHOOSING AN INVESTMENT PROPERTY

TOP TIPS

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Who do you think will be interested in renting this investment property? Do you know how much rent you will earn in the current market?

Can you afford to service outgoings both today and once retired including the gap between its rent and loan (if any), management fees, council and water rates, body corporate fees if applicable, insurance, ongoing maintenance and any renovations needed longterm?

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Sandra and Chris Currie relax in their new home, overlooking the 16th hole at Kooindah Waters.

Is the homes suburb forecast to experience strong population growth? What is your budget? Be very clear about what you can and cannot afford both pre- and postretirement.

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Are there any new infrastructure developments afoot that will create more jobs and/or greater suburban appeal? Where does the property sit in the broader market the lower/higher side?

HOME ON COURSE
SANDRA and Chris Curries dream to live on a golf course seemed out of reach, until an unplanned visit to Kooindah Waters in January. Within 10 weeks of their visit, the couple was relaxing in their new home overlooking the 16th hole. We first visited Kooindah Waters in 2006 after reading about it in a golf magazine, Sandra said. We loved the location, however at that stage most of the homes were two storey, which didnt suit us. The couple returned to Woronora Heights and didnt visit Kooindah Waters again until January 2013, when they decided to see how the estate had progressed during a visit tothe Central Coast. I loved it immediately, it was just beautiful and we were thrilled to find out that single level homes, with stunning views of the golf course, were for sale at an affordable price, said Sandra. The couple put their fourlevel Sydney home on the market for $600,000 and sold it within a week for $682,000. They were delighted with the result. It paid off their mortgage , allowed them to downsize and action a financial plan that included increased super and investments. ``It was the best decision we ever made, Sandra said of selling up the family home, downsizing and retiring to the Central Coast. Sandra and Chris are now both keen golfers and the couple has met many likeminded neighbours and developed a very active social life. The social life that we enjoy was completely unexpected. AtKooindah Waters people chat to their neighbours, sometimes we get together for a meal or afternoon tea. Everyone is so friendly. Thats probably the best thing. The couple has no regrets about leaving their Sydney home of 20 years. We lived on the edge of the national park at Woronora Heights but it wasnt as beautiful as Kooindah Waters.

Does the property appeal to both renters and homeowners? Homes with the broadest appeal have far greater chance of recording capital growth than those only appealing to atenant.

Do you want to invest in a unit or a house? Also ask yourself which option will meet your overall objective. Each option offers a different return so youll need to consider whether rental yield or capital growth is more important to you in the longterm.

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WEVE HELPED MORE AUSTRALIANS BUY THEIR OWN HOME THAN ANY OTHER BANK.
Talk to a lending expert or visit commbank.com.au/home

Things to know before you Can: Applications are subject to credit approval. Commonwealth Bank of Australia ABN 48 123 123 124. Australian credit licence 234945.

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