There is a lot of talk going on about housing affordability lately. Some of it hysterical, some of it measured, some of it not so much.
The hysterical group seem set on a path of negativity where the world as we know it is about to collapse with property set to fall 50% overnight. These people are in the same boat with the property bubble mob. They all scream loudly for assistance to the First Home Buyer who apparently have now given up on the dream of owning a home. (Strangely none of the ones I see seem to have given up though!)
What I find amusing about all this is that in reality only one person can ever have any impact on whether your dream works out or not. It’s you. Only the individual can take responsibility for achieving what they want. It’s funny listening to the hysterical ones demanding action be taken by the Government and ever increasing handouts to be allocated so “affordability” is improved.
I’m sorry, but looking for handouts is just symptomatic of underachievement. There are no handouts in the real world. You work for what you get. Houses are expensive. They always have been. That’s why you have to borrow money to get one. And unfortunately if you have to borrow and use someone else’s money to buy a house you are bound by their rules.
I can never understand why the obvious solution is never brought into the conversation. However, for those that want to listen I have the simple answer.
Live within your means, sacrifice to achieve your aims, budget your finances and save.
That’s all there is to it.
Lenders want to help and the more you can save the better off you are. If you want to buy a house find out what you can borrow and look for one that fits your price range. When you have your home you can work hard to pay off the debt while the property increases in value. That’s called creating equity and it happens because we have a healthy property market. This equity allows you to buy something else down the track, be it your dream home or an investment property. BUT the problem is it doesn’t happen overnight.
Think about this. Lenders will allow you, in most cases, to borrow using a 30 year term. It doesn’t have to take that long to pay it off unless you let it happen that way. You take responsibility for what happens, no matter what. If debt worries you, then pay it off as fast as you can. Sacrifice, work hard. Get somewhere on your own initiative. It’s up to you.
What we could say then is that ‘affordability’ is actually made up of common sense and choice. If I have a low income I know instinctively that I can’t afford to buy in an expensive suburb. That’s common sense. However, I can aspire to live in an expensive suburb. I can work harder, save more, invest strategically and over time I can live where I want. That’s choice. Simple.
Now affordability, both as a word and a concept, has been hijacked by the media. The word has been manipulated to have a negative connotation rather than simply being a description of the measure of your ability to buy something. Rather, what we see and hear is that ‘affordability’ itself is to blame. Somehow this ‘affordability’ demon has made houses too expensive. The funny thing is, when you don’t have a house they always seem too expensive but somehow the majority of people end up owning one. How do you think they managed to do that? Saving, sacrifice and hard work, combined with common sense.
It’s no coincidence that hard work is required to succeed. Consider sports for example. There isn’t an athlete competing in any sport who doesn’t realise that hard work pays off. Training, repetitive work, sacrifice and coaching will have to be employed to reach the goal. Being successful in any endeavour requires all of these factors. Building up a business is exactly the same thing.
Why is buying a home any different? Why is there this misconception that things will be handed to us without effort? Think about this;
Ask yourself the hard questions. Do I need Foxtel? Do I need to smoke? Do I need take away meals? Do I have to go overseas for a holiday every year? What can I do to cut down my expenses?
Now I know there will be outrage at this radical proposal. How can I possibly suggest that people sacrifice their pleasure just to own a home? It’s not fair. It’s unreasonable. I can hear the doomsayers already.
Unfortunately though, buying and owning a home is not like buying a Fridge or a dining table. Last time I looked you couldn’t get a house through Harvey Norman or JB Hi Fi. A house is a long term purchase and the finance attached to it will take a long time to pay off. Take responsibility for that. You don’t have to like it but you do have to accept it.
Every person is responsible for their own financial well-being. Government support is only for those that can’t look after themselves, NOT those who choose not to.
I know from personal experience that sacrifice is necessary. I know from my experience in finance that hard work is necessary. I see people every day who are doing what it takes to reach financial freedom. They have made the choice to do so. They accept the responsibility that comes with making a choice.
Anything worthwhile takes hard work and sacrifice.
How badly do you want to own a property?
To find out more come and one of our upcoming Workshopa where we look at all of these questions. For a more personal experience click here to request an appointment with one of our friendly Property Advisors.