New Ways of Getting onto the Property Ladder

We hear a lot about how difficult it is to save for a deposit and get onto the property ladder. Well, according to an article through The Courier Mail last month, a 17-year-old woman from the Gold Coast might have come up with an ingenious solution. She’utes crowdfunding her house deposit to break into the Gold Coast home market.

She’s buying the home as an investment, not to live in. She wants to give herself the best start in life and set up her future.?She understands what she wants to buy and just how much she can borrow, and she or he is left with a $48,000 shortfall.

To make up the difference, she’s providing 70 weeks of holiday accommodation in her new home for anyone looking to have a holiday in the vacation funds of Australia, the Precious metal Coast. If enough people rent a week’s accommodation ahead of time, she will use the money to pay a deposit on her house.

The qualities she is looking at are 3 bedroom homes within Fifteen minutes of the beach and 10 to 20 minutes from the Gold Coastline amusement parks. Once the holiday accommodations have been completed, the house will be rented out

If she fails to enhance the money, the contributions she has received will be returned. However, if she does overcome the line, she may well be on the winner. According to a recent article from the Australian Financial Review, the coming property boom on the Gold Coast will see some properties triple in value, driven usually by Chinese investment and growing rapidly tourism numbers.

It’s an ingenious thought, crowd funding a deposit to purchase an investment property. That’s how 17 year olds think nowadays. But can you see the implications? There is potentially a whole new demographic to bid up Australian real estate that simply wasn’t presently there before.

Many don’t believe Australian property can go higher, however innovative ideas like this one ought to keep property prices humming together for now…and into the subsequent real estate peak.

Of course, there are many other ways that property will go higher.

Subdivision is something which continues to gain traction. It’s happening all around where I live. There are four subdivisions in my tiny little courtroom alone, and it alters the way property is viewed and valued. Blocks able to be subdivided come with an increased potential use worth, keeping asking prices high of these lots. It also allows elevated housing affordability by reducing the land costs.

A free standing home on a large block will most likely become a hurdle too high for many families. Like it or not, the days of kicking the footy in the backyard may be on borrowed period, as Australians settle for smaller sized lot sizes, like the English and Europeans already do.

Enormous infrastructure plans are going upon all around the world. Australia is no exclusion. Money spent on roads as well as rail lines can only perform one thing — bring higher home values.

Possibly the biggest factor in home prices is technology. The huge gains promised should provide great improvements in efficiency. For example, in the future we may observe 3D printing used to develop really cheap houses. A Chinese company is already carrying this out. They’re building 10 houses a day. Each small home takes minimal labour and costs as little as US$4,800. Now they are only basic structures. And also the technology has some way to go. However should this technology really take off, this will drive land costs higher.

Now you may have read some of the mainstream articles telling you which Australian housing is at in the past unaffordable levels and that an accident is imminent. This viewpoint is reached by evaluating the average adult wage to accommodate prices from generations ago. But this is a flawed assessment. The days of dad going off to work while mum is likely the children are long gone. It is now usually two incomes putting in a bid on Australian real estate. The data, in terms of combined household income, shows housing affordability has done nothing but keep up with wages for the last decade and more. This indicates the potential for property to go higher.

Another factor to keep property prices on the boil is just offshore wealth, particularly from cashed-up Chinese seeking a secure property legal rights system. Don’t expect this trend to slow in the near future. The lower Australian dollar can make Aussie property more appealing in order to overseas interests.

Then there is populace growth. The big swing improving our recent population growth estimates is net overseas migration. This from a recent post in the Australian Financial Review, under the title ‘Who will profit from Australia’s population boom?’

‘The ABS reviews that the share of Aussies born overseas recently arrived at a 120-year high. “Australia traditionally had a significant proportion of migrants, but we’ve now hit a peak not seen since the gold rushes of the late 1800s,” says the ABS’ Denise Carlton. This year China surpassed the United Kingdom because the primary source of permanent migrants and also, since that time China and India have continued to provide the largest number of brand new residents.’

Using the figures of the 2015 Intergenerational Report, and assuming overseas migration remains constant, then Australia’s human population is estimated to double to 47 million by 2055. That’s hugely beneficial for property costs.

And the final factor is helping to loosen credit. For now, mortgage credit is still quite tight and reasonably difficult to get. However, ought to credit standards loosen that will allow even more people to borrow in order to bid on property. This would be hugely beneficial for property prices.

Where in order to now for Aussie property?

At Cycles, Developments and Forecasts we get plenty of suggestions suggesting Australian property is on the verge of collapse. Some readers resist the idea of Australian property heading higher because wages are not increasing and the post-mining boom economic climate is stagnating. However, history indicates otherwise.

A 17 year old girl from the Gold Coast, regardless of whether she is successful or not, has given us a glimpse of exactly what might be achievable.

Innovations like this recommend this real estate cycle may have some way to go yet. In fact, if history is any guide we are only just starting out. Early indications suggest this particular cycle may well dwarf all others. The secret is to time it all to your benefit. Go here to find out how.

Regards,

Terence Duffy,

Contributing Publisher, Money Morning

From the Port Phillip Publishing Library

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