Close your eyes, take a deep breath, and imagine your dream family home. For some people this is a clifftop beach house overlooking the ocean, for others it’s just the white picket fence on enough land for the kids to play backyard cricket, Sadly, even this has now become out of reach for the majority of Australians, especially for us, the younger generation. We can thank interest rates, foreign investors, & population growth for causing housing prices to increase an average of 6.8% and 5.9% for units annually over the last 2.5 decades, thankfully now that the Australian market has had a minor correction, we have a small window of opportunity to still achieve the dream of owning our own home. We can now attend auctions without property investors bidding at a faster rate than the auctioneer can count, or the fear of missing out causing us to overpay, we can take our time and asses properties individually, we might just need to re-align our “Dream Home” to something more accommodating to the recent trends and current market supply. Apart from the accomplishment of owning your own home, a secondary benefit (or primary if your investing) for purchasing residential property, is to accumulate high capital growth annually, the property market is no different than any other economy and is mainly driven by supply and demand, so let’s discuss how to avoid getting caught at either end of the pendulum. Firstly, let's go over what to stay away from. Apartments, generally are built in large numbers and in close proximity, this creates a huge oversupply, with not much variation on the layout of floor plans, It might seem like a cheaper way to get into the market, but when it’s time to re-sell or re-finance, you're competing with and bound by every other apartment in the same complex, or similar apartments in the area. With a constant surplus of competing apartments, it’s difficult to accomplish more than the minimum annual capital growth, which in the worst cases only trails inflation, If buying an apartment or unit is a must, try to stick to complexes that only have 5-10 dwellings, with low annual strata fees. House & Land estates, now these seem to be all the rage for first home buyers, and are very attractive from the outside but can easily trap you into a false sense of capital growth, they are controlled and released in stages, for example, stage 1 might be released with 12 blocks of land, at $320,000 per block. Once all 12 blocks are sold, they’ll plan to release stage 2, 3 months later. And decide the land sold so fast that they are now selling the next 10 blocks at $340,000 each, this may look like a quick $20,000 capital gain, but in essence, is only a demand-driven price increase, and is not sustainable at that rate. With this mentality, your block would be worth $480,000 and increase by 50% in only two years, It's not over yet, In 3 years time when you want to refinance or sell, they’ll just be releasing stage 12 of the estate, all new home buyers would rather have a brand new home than something that’s 3 years old for the same price, making it hard to sell and de-valuing your property. Reverse living, these types of floor plans are relatively cheaper then typically built equivalent, and for a good reason, they generally have a great disconnect between certain areas of the dwelling, causing an awkward flow and unused feeling in some spaces, constantly having to go up and down stairs throughout the day also makes them undesirable for elderly or young families, this cuts out a big chunk of the market when it comes to re-sale ability. What to focus on: The simplest and most valuable saying in property I have heard is material depreciates, while land appreciates in value, the material is the brick and mortar home you are planning to purchase. The land will always be king and if you're happy to move out a little further, to sit on a bigger block of land, it’s a great long-term investment, especially if you’re not intimidated by doing a renovation, this could turn into a small gold mine whilst accommodating some of your “Dream Home” features. If you want to stay closer into the city or close to family in wealthier areas, townhouses are an ideal alternative, especially if you can find one with a garage for at least storage and a nice courtyard or decked area to host in. Although townhouses generally get hit hard harder in tougher markets, they bounce back and stabilize fairly quickly, even at the peak of the market between mid-2016 and late 2017, units and townhouses where being approved for construction at the same rate as houses nationally, sitting around 10,000 approvals per month, this was the first time in recorded data since 1989 that Houses & Units where being approved at the same rate, and it won’t be the last. My best advice is to spot out properties actually worth the advertised price and negotiate down from there, If the property is listed cheaper than the market value it's generally too good to be true, an extra $10,000 - $20,000 thousand now, is nothing after a couple of years of capital growth and should be retained when re-selling the property. As always, seek your own professional financial and property buying advice for your current situation.

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