Way back in 1993, my now husband and I purchased our first property. At the time, the Sydney property market was stable, and we no longer had the high interest rates of the 1980s and the early 1990’s “recession we had to have” was easing. We were lucky and found a property we loved, in the area we wanted, and at $150,000 it was under market value.
We were ready to go. We had sufficient savings for a 20% deposit, which at $30,000 was relatively easy to do. The only hurdle we faced was the bank telling me I needed a male guarantor as I was a single female, even though I was employed full time and purchasing with my fiancé! This of course didn’t go down well with me, and we went elsewhere for the loan.
Despite this, buying our first property felt so easy, and we were elated with having our first home together. Fast forward 30 years and that first home that we paid $150,000 for, is now valued at around $1.2 million.
As I’m sure all of you with children have heard, my eldest daughter, at age 21, was completely convinced she would never be able to buy a house in Sydney. She even spoke about moving further afield, like some of her cohort have done, just to be able to afford something. But she really wants to live near where she has grown up, which my heart is happy about.
For her to buy a house in the area where she has grown up, she calculated it would take her another 4 years to save a 10% deposit and she still would not qualify for a loan for the balance based on her income. Through our experience, we’ve chatted to our kids about how important it is for them to get into the property market sooner rather than later – we know property grows in value over time, and that it will help them both in the future.
But how can a 21-year-old, who works in childcare full-time, while also studying, afford to buy a home? That’s where education and mum and dad come in!
As parents, we have educated our kids by our actions as investors. They are also lucky to have been exposed to the education at Blue Wealth from a young age. At the dinner table, our conversations are generally catching up on what we have going on in our lives, with lots of laughter. But as curious humans, the conversations would often be about what was happening in politics, the economy or the world in general. We always found these conversations are an opportunity for us as parents to discuss different investment strategies, including those that have worked for us, as well as those that did not go to plan.
What has always been clear was their aim to invest, they just needed a little help.
When they started earning their own money, we encouraged them to save a portion of their income every pay cycle in a special savings account just for a property deposit. It doesn’t matter how much or how little they earnt it was all about setting up good habits.
Saving money takes discipline and it does mean that sometimes they have to curb their spending on the luxuries in life, but both of our kids have been diligent with their savings, have been able to save money, pay their bills, and still be able to go out with friends and go on holidays.
To support them, as parents, we explored a few different options. We looked at whether we use the equity in our home to help our kids with their deposit or whether we gift them some money. We decided that while they were saving effectively, we would not charge them board for staying at home, and we would help by contributing an amount to their deposit.
While this does mean that sometimes it feels like we are subsidising their lives, we know that helping our kids to buy a property is worth it.
And now we are so proud to say our 21-year-old daughter has put a deposit on her first property – a one-bedroom apartment in North Melbourne, which will be all hers in mid-2024 when complete!
Buying the apartment off-the-plan was the perfect solution for her. She had first pick of an amazing project, which was assessed by Blue Wealth’s research team, so she knew she was buying a solid investment. She could enter the market at today’s prices, she could commit with a 10% deposit and the construction period would give her longer to save for settlement. In 2024, she’ll be ready to settle on her property, where she won’t face hurdles applying for a loan as a single female!
In my bookcase at home, I have a book for each of my kids from when they were babies. In those books I have the dates that they first sat, first crawled, took their first step, what their first word was, when they lost their first tooth. I even have a lock of their hair from their first haircut. I’m so proud to now add to that book “When they purchased their first property”.