How to Overcome the Affordability Crisis
Affordability is a term often discussed in property circles, but its meaning varies depending on whether you’re a buyer, renter, or seller. At its core, affordability is a balancing act between desires, necessities, and financial realities.
As the saying goes, “Bad habits are like a comfortable bed: easy to get into, but hard to get out of.” Making financial adjustments and adopting smarter habits can be key to overcoming affordability challenges.
If homeownership is on your horizon, a great first step is consulting a lender. Understanding budgeting, loan options, and ongoing costs will give you clarity on your financial position. If the numbers align and the timing is right, you’re in a strong position. If not, stepping back to reassess can be the wisest choice.
Many believe that if you can’t afford to buy, there’s no point in looking—but that’s not entirely true. Attending inspections allows you to learn about architectural styles, pricing trends, and market competition. Knowledge is power, and the more informed you are, the better equipped you’ll be to enter the market confidently.
Breaking the rental cycle requires determination, disciplined saving, and resisting unnecessary spending. Keeping a clear financial goal in mind will help maintain focus and motivation.
The best way to save is by tracking your income and expenses. A well-structured budget should include: ✔Rent and savings targets ✔Existing loans and credit card repayments ✔Utilities, groceries, and transport costs ✔Lifestyle expenses, including holidays and entertainment
Lenders typically recommend that mortgage repayments should not exceed 30% of gross monthly income. Automating savings via direct debit can help accelerate your progress.
Being realistic about what you can afford is crucial. While some lenders allow borrowing up to 95% of a home’s value, a healthy deposit (historically 20%) is ideal. Additionally, account for costs like stamp duty, settlement fees, home insurance, and moving expenses. Unexpected expenses, such as appliance breakdowns, should also be factored into your budget.
Recent reports indicate that one in seven borrowers would struggle if interest rates rose by 1%, and one in three if rates increased by 2%. With potential rate hikes on the horizon, ensuring financial stability is more important than ever.
If affordability remains a challenge, consider whether buying now is the right decision or if waiting could provide better opportunities. While delaying may mean higher prices in the future, financial security is always worth prioritising. By staying informed, disciplined, and prepared, you can navigate the property market with confidence.
