In news that should shock no one, new data shows that almost 70 per cent of all property investors are forced to make sacrifices to their lifestyle in order to buy their investment property.
Perhaps more surprising is the fact that Australians are increasingly taking property debt into their retirement years, which has been revealed by another set of data.
According to Mortgage Choice’s annual Investor Survey, 69.4 per cent of investors admitted to making sacrifices in order to buy property, up from 68 per cent in 2015.
Mortgage Choice chief executive officer John Flavell says with property prices rising across most markets, he isn’t surprised to hear a greater percentage of investors are forced to make lifestyle sacrifices in order to buy property.
“Data from CoreLogic found property values climbed 8.3 per cent across the combined capital cities over the last 12 months,” he says.
“While some capital cities performed better than others in terms of property price growth, it’s fair to say that most markets have enjoyed an upswing in values over the last few years.
“With that in mind, I’m hardly surprised to hear investors are having to make sacrifices in order to achieve their property investment goals.”
Asked what sacrifices they had made to afford their property purchase, 57.9 per cent of respondents said they’d cut back on their day-to-day spending.
“There are a few ways most people can easily reduce their spending and increase their level of savings,” Flavell says, adding the following tips:
Tip 1: Pack a lunch
Take leftovers or a homemade lunch to work every day. A bought lunch can cost as much as $15 a day – that’s $75 a week or $3900 a year. If that money was invested into a high interest savings account, for example, a person could be more than $4000 wealthier each year.
Tip 2: Live off cash
Set yourself a cash budget. Plan exactly how much you need to spend each week to cover all expenses and then withdraw that amount in cash at the beginning of each week. According to data from RateCity, 40 per cent of all ATM transactions are being done at “foreign” ATMs, costing Australians approximately $548 million in avoidable fees a year.
Tip 3: Ask for discounts
Been with the same gym for some time? It may be worth calling head office and asking if they can reduce the regular payments. This could end up saving you $5 a week, or $260 a year.
Tip 4: Shop around
Many people will choose a health insurance or car insurance provider and then stick with them year after year. Get online and see what companies are on the market that can offer better priced and better suited solutions.
Tip 5: Pay all bills on time
If you struggle to remember when bills are due, put a reminder in your calendar.
Meanwhile, data from ING DIRECT reveals more and more Aussies are taking property debt into their retirement years, with the number of over-65-year-olds still holding a mortgage rising by 28 per cent in the past three years.
Of those in their retirement years that still have a mortgage, 26 per cent hold an investor loan while 74 per cent are owner-occupiers.
The average debt they’re holding is $158,000.
Mark Woolnough, head of third party distribution at ING DIRECT, says: “As property prices climb and people wait longer to get onto the property ladder, it’s not a surprise that people are holding their home loan debt later in life.
“However, proper planning is critical to make sure that this debt doesn’t cause stress in later years and people can enjoy the retirement they have worked hard for.”
According to ING DIRECT’s Autumn Buyers Guide, since June 2012 the average capital city residential property has increased in value by 32 per cent, with growth of 7.6 per cent in the past 12 months alone.
The average age of a homebuyer has also risen in recent years to 38.
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