Figures from Mortgage Choice’s 2016 investor survey shows that 69.4% of Australian real estate investors made some sort of lifestyle sacrifice to allow them to afford an investment property.
That figure is up from 68.5% compared to the 2015 survey.
Mortgage Choice chief executive John Flavell said given current conditions in the real estate market it’s easy to see why investors are making sacrifices.
“Data from CoreLogic found property values climbed 8.3% across the combined capital cities over the last 12 months. While some capital cities performed better than others in terms of property price growth, it is fair to say that most markets have enjoyed an upswing in values over the last few years,” Flavell said.
“With that in mind, I am hardly surprised to hear investors are having to make sacrifices in order to achieve their property investment goals,” he said.
But while sacrifice may very well be becoming a necessary part of any investment strategy, it can still be a bitter pill for some.
“I’d probably say most people aren’t willing to sacrifice without some convincing,” Todd Hunter, founder of buyer’s agency wHeregroup, told Your Investment Property.
“People start to see the light when the realise that if they do sacrifice there are benefits that will come from that, but for a lot of them little luxuries in life are hard to give up,” Hunter said.
Hunter said he has clients who go to extreme lengths in terms of sacrificing to afford an investment property, but he said the things people need to give up would vary from person to person.
“It comes down to their income and general cost of living. Things like are they living at home or renting,” he told Your Investment Property
“Those sort of costs and their income will determine whether they need to make a small or a considerable sacrifice.”
Hunter said everyday expenditures such as pay TV subscriptions, expensive mobile phone plans and daily coffee purchases are among the most common money drains people face.
“If they could just bring back a few of those things and then add up month by month how much they save, the amount can actually be quite considerable.
“They’re everyday things that most people don’t put a lot of thought into, but they can certainly make a difference.”
While Hunter said small changes to everyday life can prove to have a significant benefit for those looking to enter the market, he said the first thing people should do is keep better track of their expenditure.
“What’s really surprising is how much it helps if you give people a simple budget planner and tell them that every time they spend they need to make a note of it.
“If people do that for just a month they’ll be able to categrorise their spending into food and travel and things like that.
“After doing that people are real surprised about where and how fast their money goes. That’s when people can really see in black and white where they can make considerable savings."
