Yahoo Finance Aussies buy property with friends, family to afford ‘great Australian dream’
Katia Kelso bought her first home with her younger sister after realising it would be too expensive to go it alone.
Cracking into the property market is becoming increasingly difficult as prices continue to skyrocket across the country. It’s prompted some Aussies to redefine what the ‘great Australian dream’ means to them and look beyond buying a home with a romantic partner.
Katia Kelso bought her first home with her younger sister in Sydney’s Dee Why. The pair had realised it was going to be too expensive to purchase a property by themselves so decided to team up to find a place to live together.
“We couldn’t have bought the property that we have alone,” Kelso told Yahoo Finance. “We would have had to look at buying smaller studios or one-bedders.
“We decided to do that together to buy a better property and something that would be big enough for both of us. Financially it worked to join forces.”
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Kelso, who is the co-founder of fashion label Ilio Nema, said her and her sister both had their own set of requirements for the home so it took them about two years to find a place they were both happy with.
They ended up purchasing a two-bedroom, two-bathroom apartment in the coastal suburb.
“We wanted two bathrooms, we wanted to make sure the bedrooms were similar sizing and no one wanted a shoe box bedroom. So it took a little longer looking at places, picking out the requirements and prerequisites that we required to live together,” the 39-year-old said.
The sisters are now coming up on their fourth year living together in the apartment and Kelso said they were happy they made the decision to buy together.
“Now we’re close to the beach, we have sunlight. The benefits we got combining our money [allowed us to buy] where we wanted to live rather than a smaller space on our own,” Kelso said.
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‘Everything is 50/50’
Kelso and her sister took out a joint home loan for the property, putting in an equal deposit amount, and are now splitting costs between them.
“We own the property 50/50. We have a joint account that pays for bills and everything is 50/50,” Kelso said.
With interest rates increasing to a decade high over the last few years, Kelso said she is thankful she is able to share the cost of repayments with her sister.
“Interest rates have gone up but it’s only half up for me because I’m only paying half the mortgage,” she said.
“It’s definitely good to be splitting the additional increase with someone else, rather than the burden being solely on myself.”
‘Great Australian dream’ not dead
Millions of Aussies say they would consider buying a property with a friend, new research by ING has found.
Almost half (47 per cent) of those surveyed who had purchased, or were considering purchasing a property with someone who wasn’t a spouse or partner, said they’d consider buying with a friend.
Sharing responsibilities and payments, more flexibility in property locations, and the opportunity to purchase a bigger home than they could afford on their own were some of the main appeals of buying with a friend.
ING head of consumer and market insights Matt Bowen said Aussies were being “smart” about how they reached their property goals.
“Property prices have been on an upward trajectory for some time now and the costs of living are proving a real sting for many,” Bowen said. “But despite this, the great Australian dream of homeownership is not dead – it’s just different.”
Easier for family, friends to buy together
It’s now also easier for friends, siblings and other family members to team up to buy a home, after the Home Guarantee Scheme was expanded.
The scheme previously only covered singles, married or de facto couples, but was expanded to cover these kinds of relationships in July last year.
Under the scheme, eligible homebuyers can buy a property with a deposit of as little as 5 per cent. The government acts as a guarantee on up to 15 per cent of the loan, so the borrower can avoid paying costly lenders mortgage insurance.
Risks of buying property with friends or family
Bowen encouraged Aussies to understand the risks involved with buying with friends or family members.
“Make sure you seek legal and financial advice about ownership options before entering any financial commitment,” he said.
“You should also formalise the mechanics for future possibilities – for example, what will happen if one of you wants to sell?
“Do your research about your mortgage options and be aware that you’re both accountable for repaying the loan. If one person can’t make their repayments, the other may need to chip in.”
The Kelso sisters made sure they were on the same page on future property plans, including what would happen if either of them wanted to sell or move out, and the impact of future partnerships and relationships.
“Buying with a friend or family member can get complicated if things change for one person,” Kelso said.
“So I think really sitting down and chatting together and working out where you both see the future of the place and some potential future changes that could come about and how you’d deal with them as property owners and as roommates [is important].”
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