Rising property prices across Australia are forcing first home buyers to save for longer, and this is making it difficult for many to reach their savings goal. But, this doesnt need to be the case if you create a strategic plan and then stick to your strategy.
According to a recent first home owner survey conducted in New South Wales (N.S.W), which canvassed 1,000 first home buyers who had bought a home in the last 2-years, almost 1 in 3 said they had saved for more than 5-years before they could afford to buy. This, said those surveyed, was mainly due to escalating property prices. In comparison, a similar survey conducted in 2011 found that 51.3 percent of N.S.W first home buyers took less than 2-years before they could afford to buy property.
This comes as no surprise to property experts, who say that property prices are climbing at an impressive rate, which then means that first home buyers are having to save for longer.
CoreLogic RP Data research indicates that property prices in Australian capital cities have collectively climbed by 10.9 percent over the last 12-months to September. With Sydney witnessing the most pronounced growth with a 14.3 percent rise over 12-months to October 2014.
Of course, while some buyers benefit from the price growth, first home buyers feel like the donkey with the ever elusive carrot dangling before them, where buying their first home is within sight, but they can never quite reach it and sink their teeth into it. This is because what theyve saved for a deposit is never quite enough to purchase a home.
The best way to beat home price rise is to save for a deposit faster. Lets look at how you can achieve this.
Faster Home Deposit Savings Tips
So if youre looking to buy a home, but feel like its taking you forever to save, here are a few tips to help you save faster:
1. Review your bank account Okay, so youve had the same bank account since you were in primary school, but is it giving you the best rate of interest? Many banks these days offer you a number of incentives to use their services. So make sure you shop around and compare savings account interest rates, and fees. Find an account that offers you the highest rate of interest and lowest cost in terms of fees.
2. Create a separate savings account By having a separate savings account to your everyday account youre ensuring that you stay on top of your savings goal and youre giving yourself incentive to achieve your goal. Youre also reducing the temptation to spend the money youve saved.
3. Take advantage of deals Some lenders offer new account holders a higher rate of interest if they deposit a certain amount into their account each month or withdraw a set amount from an ATM. If your lender has these types of incentives in place, then make sure you use them so you earn more.
4. Open up a term-deposit Some banks have accounts that enable you to deposit money into them for a set term. These accounts are called term deposits and typically attract a high rate of interest. Some of these accounts will allow you to make a withdrawal once a month, without incurring a penalty, while others are locked for the term and you wont be able to access your money until the term has ended.
5. Sell any unwanted items Go through your old clothing, furniture and even appliances and work out what you dont use. Put these items aside, and then have a garage sale, sell them on eBay or even at a local trash and treasure market. Youd be surprised at how much money you can make. The money you raise can then be put into your term deposit or savings account.
6. Track your spending Its difficult to save and very easy to spend. There are free budget planners and spending trackers that you can download online. These will allow you to determine what you are spending where and how you can reduce your costs so that you can save more.
7. Ask for discounts If youre a regular at a store or gym then ask them how you can be rewarded for your customer loyalty. But, only ask for a discount if you feel comfortable.
8. Review your memberships We often take out gym and club memberships with good intentions of using them, but usually find that these typically end-up costing us more than we originally thought and we never actually use them. If this is the case, then its time to cancel your unused memberships and to put the money you save into your bank account.
9. Review your insurances Most of us have a set and forget mindset when it comes to car, life and income protection insurance. We often take out a policy with a company and then just renew it annually without thinking about the cost. If this sounds like you, then its time to review your insurance policies. Do some research and compare the rate you are currently paying, to other insurance providers. Then ask yourself, Can I save by changing to another insurance provider? If you can, then make the switch, and put what you save into your home loan deposit savings account.
10. Keep petrol vouchers and use them Often when we do our grocery shopping we are given a shopper voucher for cheaper fuel. Many of us dont use these, and yet, these vouchers can shave hundreds off your annual fuel costs. So rather than throwing these vouchers out, start using them.
Are you looking to buy your first home, but dont know where to start? Then contact eChoice, we can help you understand the home loan market.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!