Are Australians buying or building their dream home?

Published on November 25th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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With property prices skyrocketing across major cities potential home buyers could be flipping the age-old question of whether they would be better off to build or buy their home. Building your own home from scratch can take time, but it does have its rewards. However, the question ultimately stands as to whether Australians prefer to build their dream home instead of purchase it.

Australians caught between a rock and hard place

First-time home buyers who are looking to get one foot onto the property ladder might find it a bit tricky to do. Property prices across Australia have increased with the average median value in a city like Melbourne sitting at $828,720. If you are planning to be closer to the city centre you could be forking out more compared to people who move to the regional parts of Australia.

Building your own house might seem like the next best bet to own a home, but that can be costly and also takes time. Residential construction of property over the previous years has continued to grow, but it still isn’t enough to match the population growth. According to The New Daily, places like Melbourne has an influx of 120,000 people moving into it per annum, but only 75,000 houses are being built.

Aussies try other ways to get onto the property ladder

Building or purchasing a dream home could be a goal that will take more time to accomplish over time, but this is not stopping Australians from looking for alternative ways to get onto the property ladder.

More people are purchasing units and apartments to slowly start them off on the property ladder while saving money that will help them build a sizeable deposit to purchase a house. This is seen in the data released by the Australian Bureau of Statistics (ABS) which recorded a mammoth growth in 155,275 units compared to 69,639 houses that were under construction.

Renting out a unit or apartment might be the new way for Australians to grip the reigns of their finances to eventually save towards a house, but if you are not careful you could find yourself delaying the process of owning a house due to your current financial decisions.

Don’t Jeopardise your chances of owning a home

There are quite a few large expenses that are involved when building a house from scratch. For example, buying a lot in a place like Hobart can cost you a median price of $165,000 and the construction cost can run up to $175,386 which is a total of $340,386.

If you decide to build it is important that you carefully consider the time frame and costs of seeing the project to completion. Although most Australians are taking longer to crack the property market to be proud homeowners, it pays to watch how you manage your finances to secure your house.

The approval of a home loan will be determined on your credit report that tracks how you have been handling other financial commitments such as bills, loan repayments, and credit.

Always remember to build healthy financial habits such as paying your bills on time, choosing a property that does not exceed 30% of your income, and comparing your options for the best rate. Your future self will thank you for it.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for home loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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