HERALDSUN.COM.

AU/REALESTATE SATURDAY, FEBRUARY 22, 2014

REALESTATE 21

PROPERTY LADDER
SPECIAL REPORT

YOUR GUIDE TO BUYING AND INVESTING

NEW WAYS TO BUY YOUR FIRST HOME TOP TIPS FOR UPSIZING

WEVE HELPED MORE VICTORIANS 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.
V1 - MHSE01Z01RE

22 REALESTATE

SATURDAY, FEBRUARY 22, 2014 HERALDSUN.COM.AU/REALESTATE

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 of 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 confirmed most first-home purchases were new dwellings in the past 12 months in line with most states firsthome 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 throughout the city within a 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 respective portions of a jointly owned property. Loans backed by guarantors support, where a borrowers parents offer their home as extra security, is another increasingly popular borrowing option.

DREAM WITHIN REACH

Another strategy is borrowing to buy a first property the borrower will not live in. Dubbed rentvestors, some first-home buyers are opting to buy rental homes while either continuing to live at home or rent 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 firsthome buyers are not really in the market.

There are still ways to buy a first property, you just have to think creatively
C L I V E VA N H O R E N

This was at odds with the number of people aged between 25 and 35 in Australia today. Gen Y are the children of the baby boomers and there is a bucket of them, Mr Salt said. 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 buying this year, Real Estate Institute of Australia president Peter Bushby said affordability varied between states making it impossible to generalise. In Tasmania it is still possible to buy quite reasonable houses in the city for quite affordable prices, he said. Of course in Sydney, with prices and competition from investor buyers making it harder, most are wanting inner apartments near attractions, rail links, and with little or even no yard or maintenance needs, if they dont want a house in the outer suburbs.

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 $250,000 for a house in Melton to $483,000 for aNorthcote unit. But theyre not in our top10 just for their affordability. Theyve also recorded solid price growth over the past year. Units are the way to go if youre looking in the first six suburbs, while the remaining four offer top house buys. 1. GARDENVALE 2. CAULFIELD EAST 3. BOX HILL 4. NORTH MELBOURNE 5. THORNBURY 6. NORTHCOTE 7. LILYDALE 8. POINT COOK 9. MELTON 10. TARNEIT Source: Commonwealth Bank and RP Data

$1,000 CASHBACK
MHSE01Z01RE - V1

ON YOUR FIRST HOME LOAN? COMMBANK CAN.

HERALDSUN.COM.AU/REALESTATE SATURDAY, FEBRUARY 22, 2014

LIFE STAGE 25-35 YEARS

REALESTATE 23
BROUGHT TO YOU BY

1 2 3
Letitia Hatton at her new apartment in Flinders St, Thornbury. Picture: STUART MILLIGAN

TOP TIPS FOR BUYING YOUR FIRST HOME

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.

4
LOVE THE LIFESTYLE 5
Hatton. Ms Hatton, 32, saw her Thornbury apartment for the first time the same day she bought it. She made a successful $360,000 offer on the apartment, in Flinders St, after it was passed in at auction.

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.

HE right price and right location proved an irrisitable combination for firsthome buyer Letitia

While a spontaneous buy, it followed much determined saving by the Victoria Tourism Industry Council policy manager, who moved in last weekend after settling on Valentines Day. I knew I had enough saved up to make an offer, she said. A two-bedroom home near the city in my price range ... also with public transport at the doorstep, a growing cafe culture and fabulous nightspots nearby

... it was an opportunity too good to pass up. Ms Hatton, who previously rented in Northcote, plans to live in the apartment for a while and rent it out when she buys her next property. She said that while most of her friends still rented, one recently bought a property off the plan to avoid stamp duty. Love Real Estate Thornburys Simone Curley said Ms Hatton was one of

many first-home-buying professionals who were looking for smaller dwellings close to the city. It all about the lifestyle for these buyers, she said. Ms Curley said she had seen the rise of the rentvestorin recent times. Most first-home buyers prefer to live in a rental property, usually with friends as close to the CBD as possible, she said.

They secure properties in Thornbury for investment with the aim of moving in down the track. Ms Curley said 42 per cent of her agencys sales were to firsthome buyers. One- or two-bedroom villa units with a small outdoor area have been selling particularly well to young buyers in the lastyear, she said. CHRISTINE deSILVA

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.
V1 - MHSE01Z01RE

24 REALESTATE

SATURDAY, FEBRUARY 22, 2014 HERALDSUN.COM.AU/REALESTATE

PROPERTY LADDER

ITS BACK TO BASICS

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

Buying a second or third home it never gets any easier, reports Caroline James.

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, at worst you can rent in the short-term, Mr Yardney said.

THE TOP 10 SUBURBS

WITH some equity built up in their existing property, buyers in the 35 to 55 age bracket generally have a bit more cash to splash on their next home. Houses with plenty of room for the kids are usually at the top of their list and the suburbs below offer great family house buys. Most have median sale prices in the $600,000 and $700,000 range. Mont Albert North and Ormond are options for those with $900,000-plus to spend, while Balwyn North is the top pick for those with budgets just above $1 million. 1. MARIBYRNONG 2. BALWYN NORTH 3. MONT ALBERT NORTH 4. CHADSTONE 5. ORMOND 6. BOX HILL NORTH 7. BLACKBURN NORTH 8. GLEN WAVERLEY 9. BENTLEIGH EAST 10. ELTHAM Source: Commonwealth Bank and RP Data

WEVE HELPED MORE VICTORIANS 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.
MHSE01Z01RE - V1

HERALDSUN.COM.AU/REALESTATE SATURDAY, FEBRUARY 22, 2014

LIFE STAGE 35-55 YEARS

REALESTATE 25
BROUGHT TO YOU BY

UPSIZE A REAL FAMILY OPTION

HE Ciavola household in Diamond Creek was bursting at the seams last year. Sab and wife Alex had been thinking about upsizing the family home for a while, planning to sell their three-bedroom home before buying a new place. Wed been going through the papers and realestate.com.au and just wanted to see what our money would get us, Mr Ciavola said. Initially they were convinced everything was either too small or beyond their price range. But with Molly, 14-months, and Harvey the dog needing more space they decided to put in an offer on a house in Main Rd, Eltham. We had wanted to sell then buy, but we ended up buying before selling and that gave us a bit of panic, Mr Ciavola said.

Alex and Sab Ciavola with daughter Molly and dog Harvey at their new property in Eltham. Picture: RICHARD SERONG

It was just a good opportunity for us, I feel we got the house at a bit of a steal and it doesnt need much work. We liked the area and its very family oriented and theres lots of walking and riding tracks. Tristan Meserle, from Morrison Kleeman in Eltham, sold the family the Eltham house and then helped them sell their Diamond Creek property. He said the area was popular with family buyers looking for space and a relaxing atmosphere. We are seeing a lot of people moving within the area, a lot are upsizing from Greensborough, Diamond Creek and Montmorency, hesaid. And we also see quite a lot of people coming out from Clifton Hill and Alphington.
NATHAN MAWBY

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.

V1 - MHSE01Z01RE

26 REALESTATE

SATURDAY, FEBRUARY 22, 2014 HERALDSUN.COM.AU/REALESTATE

PROPERTY LADDER

GREY POWER PLAY

Baby Boomers are changing the face of the investment market, Caroline James writes
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 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 longterm 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. Most of the suburbs below offer houses or units that have returned healthy rental yields of between 4.2 and 6per cent in the past 12months. Beaumaris rounds out the list for its lifestyle appeal and steady median price growth over the past five years. 1. CARLTON 2. CORIO 3. MELBOURNE 4. WENDOUREE 5. MILLGROVE 6. FRANKSTON NORTH 7. KEYSBOROUGH 8. GROVEDALE 9. RICHMOND 10. BEAUMARIS Source Commonwealth Bank and RP Data

WEVE HELPED MORE VICTORIANS BUY A PROPERTY THAN ANY OTHER BANK.
Talk to a lending expert or visit commbank.com.au/buyaproperty
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.
MHSE01Z01RE - V1

HERALDSUN.COM.AU/REALESTATE SATURDAY, FEBRUARY 22, 2014

LIFE STAGE 55+ YEARS

REALESTATE 27
BROUGHT TO YOU BY

WHAT TO ASK WHEN CHOOSING AN INVESTMENT PROPERTY

TOP TIPS

1 2 3

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?

4 5
Retirees Graham and Angela Thomas in front of their new home in Beaumaris. Picture: JAY TOWN

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.

6 7 8

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?

S well as organising the big move into their new Beaumaris townhouse, downsizers Graham and Angela Thomas will soon call on their financial adviser. And if they choose to look atinvesting in property, the couple have an agent all linedup. In December, Buxton Bentleigh agent Vish Prashad

SMALL STEP BACK A 9

helped them buy their new townhouse at 3 Keith St for $765,000. And just two weeks ago, he sold their Black Rock house for $1.14 million, giving them a tidy sum in the bank. For this family dentist with more than three decades practice in Beaumaris, it was a no brainer choosing to downsize in the vicinity. We are downsizing to spend more time on other things than doing chores and maintaining a large house Dr Thomas, 70, said. The townhouse has a good design and is comfortable. It has a separate driveway, no body corporate and three on the block. And there is space when the family visits. My wifes family is local to Beaumaris and she still has family here. And we will be close to shops and transport and also Sandringham Hospital. The couple settled in Beaumaris when they married and have lived in several homes in the area since, raising a family that now extends to several great grandchildren. They paid $17,500 in 1971 for their first home and $300,000 for the Black Rock property in the 1990s. Dr Thomas said he still enjoyed his work and retirement was a few years away, although he might begin to cut back his hours. Mr Prashad said that baysidesuburbs like Beaumaris were popular with retirees and investors because of the lifestyle, facilities, good shopping and the water.
MING HAW LIM

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.

V1 - MHSE01Z01RE

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.