Yahoo Finance How young Aussie bought a home with just a $10k deposit: 'Typical Gen-Z prioritised lifestyle'
Brooke hadn't been saving for a property, but changed her mindset when she lost her rental property.
A 25-year-old Australian woman has bought a home with just a $10,000 deposit after being kicked out of her rental, and is now paying less than she did as a tenant.
Brooke was paying $1,058 a week with her partner and his brother in a three-bedroom apartment in a “good area” when her landlord decided to sell. Describing herself as a “typical Gen-Z” of the “Uber Eats and subscriptions” crowd, she hadn’t been saving for a home and instead admitted she was prioritising her lifestyle.
She’d copped a rent hike every six months (which is legal in Perth) and had to offer more than the asking price three years ago when the local rental market wasn’t one of the most competitive in the country. Now, the number of rentals in Perth is at a record-low. Inspections are swamped with hopeful tenants, many willing to offer more money to land a place.
“The option of going into another place, paying higher, competing against other people, and then in 12 or six months’ time, the landlord turning around and saying, ‘Oh, we are selling too’, it’s not ideal,” Brooke told Yahoo Finance.
Do you have a story to tell? Contact belinda.grantgeary@yahooinc.com
So, instead of being at the mercy of another landlord, the marketing professional decided to see if there were some sacrifices she could make to set herself up for the future, all without tapping the 'Bank of Mum and Dad'.
Surprisingly, she could afford to buy a two-bedroom apartment right around the corner from her old place, with a sweeping view of the city for less than her old rental and all she needed was $10,000 and some good advice to seal the deal.
RELATED
First-home buyers reveal huge amount Aussie parents gifted them
Warning and major changes: 5 things to know about 2024 Australian housing market
“I had really thought that there was just no chance at all because I hadn’t been saving for a place. But I spoke to a broker and asked, ‘What is my shot here?’. They assessed my incomings and outgoings on the 18th of September and came back to me to tell me what I could afford, then I had the keys to my new apartment by the 8th of November.”
Here’s how she did it.
Grants and schemes to give you a leg up on to property ladder
The number of first-home buyers entering the market is set to rise in 2024, with Resolve Finance finding 27 per cent of young people without a home are now poised to buy.
Managing director Don Crellin said there was one big factor influencing that shift.
“Recent government initiatives to facilitate home ownership are putting keys in doors where it wouldn’t have otherwise been possible,” he told Yahoo Finance.
Brooke is the perfect example. She works in property but didn't know she could take advantage of multiple grants and schemes to leverage her way in. The 25-year-old chose to use money she’d put away for a holiday to secure her future home. (Here's a guide to all the grants available across the country.)
“We had enough for the deposit plus the fees, which was around $5,000 for settlement and strata. We pretty much used every dollar we had,” she said.
Low deposit and fees slashed: Brooke used a Keystart loan, an initiative supported by the WA government to help lower entry costs. Instead of a 5 per cent deposit, she only needed 2 per cent and saved thousands by not having to pay lenders mortgage insurance or ongoing monthly account fees. This does mean there’s an equity share of up to 30 per cent, like the proposed federal Help to Buy scheme, but it lowers her monthly repayments.
$10k cash injection: Brooke also took advantage of the First home owner grant, which is a one-off payment from the WA govt of up to $10,000. If she’d bought an older place, she might not be eligible, but she “truly got lucky”.
“The place had just been renovated with new carpet, new paint and a new hot water system,” she said.
Not only did this mean she “didn’t have to fix anything”, it also made her eligible for the grant, which is specifically for new builds or established homes that have undergone substantial renovations.
Brooke said the apartment is nicer and her mortgage repayments are lower than her rent was, putting her in a much better position than a few short months ago.
“This is the dream, it ticked all the boxes,” she said. “The view is insane - we have full city views with a balcony, which was key for us. It’s open plan, which meets our needs, where the other house, while it was lovely, was a bit disjointed.”
‘Dream’ apartment with ‘a bit less eating out’
Brooke said she had to offer a bit more than anticipated to secure her apartment after the unrenovated one above her sold for more than expected, pushing the price up. But she made sure she didn’t overextend, and kept a financial buffer for other costs like those associated with moving.
“Generationally, it can be hard because you want your cake and to eat it too,” she said.
“I thought we’d have to have a lot more money, but now we are pulling back on our spending. Not going out as much as we were, or retail shopping. It’s about picking and choosing.”
She said there was one thing that had made the transition from renting to home ownership possible and said she’d been “shouting it from the rooftops”.
"We were going in blind but seeing a broker meant I had someone in my corner who knew exactly what to ask for, and break it down for us," she said.
“We did have to give up that money we saved for a holiday but now we are working with the broker to see how we can achieve that next goal and what that looks like.”
Untenable rental market forces tenants into home ownership
Leading property expert and Domain's chief of research, Dr Nicola Powell, predicted more tenants would be making the leap to buying a property next year as the rental market reaches a “tipping point” and over-extended landlords “divest” in early 2024.
She said the pressure from record-high asking rents and a frustration with a lack of control or rights would force people to start making compromises on things like location or number of bedrooms.
“A lot of renters have just gone, ‘Well, we need to break into the housing market or we're never going to catch up’ and that’s the mentality many people now have,” Powell told Yahoo Finance.
This might not just be within cities, but more significant jumps interstate to get access.
Perth’s median asking price for a unit is $380,435 - considerably less than Sydney’s $783,546 or Melbourne at $568,417.
For a house, the numbers are even higher but Powell thinks many Australian capital cities will have to start taking a “visionary” approach to housing.
It means more high-density living, but hopefully at a more affordable rate.
Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to our free daily newsletter.
