Increasingly limited choices and escalating prices are forcing many Australians to rethink their options when it comes to choosing a new home and location.
New research from non-bank lender State Custodians Home Loans has found that more than half (54 per cent) of Australians who own or are buying their own home said that they’re prepared to live in a more affordable or cheaper location, even one not on their wish list, to obtain the house they need or want.
In contrast, 26 per cent of Australians said that they’re not prepared to sacrifice location or their ideal home. They would prefer to live in the house and location of their choice and were prepared to take on a bigger mortgage, even if it stretches their finances.
The survey of 1,000 people nationwide also revealed that one in five people (20 per cent) who are house hunting or already own a home said that they would rather rentvest — have an investment property in an affordable location and rent where they want to live — in order to satisfy their lifestyle and location wishes while still growing an investment.
State Custodians general manager Joanna Pretty said that the dilemma of location preference versus an affordable home is a growing struggle many people face, particularly in larger cities.
“Often, people really have their heart set on a certain area but simply can’t afford a home there,” the GM said. “For the most part, you usually have to compromise in some way when you’re buying a property. However, if you really love a particular area, already have friends and family there, along with a number of conveniences such as work proximity, it can be especially wrenching if you have to look further afield due to unaffordability or needing more space for your family.”
While one quarter of people surveyed said that they would stick to their ideals and buy in the area of their choice, even if it meant they couldn’t really afford afford it, Ms Pretty advised caution.
“If you’re in that situation, you really need to thoroughly do the sums and seek advice before you commit,” the GM said. “Sometimes, people struggle to see the big picture of how their finances might pan out over the years, so it’s advisable to talk to a professional.”
Young people of 18–34 years old who own or are buying their own home (32 per cent) are twice as likely as those 35 years and older (16 per cent) to say that lifestyle and location are more important to them, and they would rather buy an investment property in a cheaper location and rent in their preferred suburb. Older Australians 50 years and older (60 per cent) are more prepared to live in a cheaper area than those aged 18–49 years old (49 per cent) overall.
“If your dream location looks unaffordable, there may still be a possibility to live in an area through an alternative strategy such as rentvesting,” Ms Pretty said. “So many people rent nowadays, [so] it’s entirely possible to create a beautiful family home in a rental property while still keeping an investment ticking over somewhere else. It just may require a little thinking outside of the box.”