Property market FOMO

If you’ve been watching the property market rise recently you might be thinking you need to get in quick before you miss out, or that with interest rates so low it’s a great time to buy an investment property. Don’t get caught up in the hype. Buying a property is a big commitment, take the time to consider your needs both now and into the future, before you jump in.

Buying a home to live in

Buying a home can be very exciting, but it’s important to consider your and your family’s needs, for example, proximity to work, schools, shops, transport and recreational facilities. You might also want to check local council websites for development plans in your desired location.

Find out about the various subsidies and schemes you may qualify for, such as:

• Defence Home Ownership Assistance Scheme (DHOAS) – a monthly subsidy paid directly into your qualifying home loan.
• Home purchase assistance scheme (HPAS) – a one-off payment to eligible members if they buy a home in their posting location and live in it.
• Home purchase or sale expenses allowance (HPSEA) – reimbursement of the reasonable costs of selling a home, purchased under HPAS, and purchasing another home in the next posting location.
• First home owner grant – a one-off grant to eligible first home owners.
• First home super saver scheme – allows accumulation fund members to save for their first home within super.

Buying an investment property

Property is a popular long-term investment in Australia, however it’s a big financial commitment, has high entry and exit fees, and having most of your eggs in one basket means you won’t be well diversified.

Tips for investing in property

• Understand the market – Only buy in areas you are familiar with or have thoroughly researched
• Growth areas – consider up and coming areas predicted to experience higher than average price growth
• Don’t overextend yourself – don’t borrow more than you can comfortably afford to repay
• Emergency fund – keep enough cash aside to cover several months’ worth or loan repayments and other property expenses in case you find yourself without a tenant
• Plan for increases – at some point in the future, interest rates are likely to increase. Consider whether you could still afford the mortgage if interest rates increased by 2%. Test different scenarios using Moneysmart’s mortgage calculator.

Property schemes and real estate investment trusts

There’s more than one way to invest in property. You can invest in a broader range of property assets through property schemes and Australian real estate investment trusts (A-REITs).

In these managed investments, you and other investors buy ‘units’ in a scheme that uses the pooled money to invest in a range of property assets. A professional investment manager operates the scheme, choosing the properties to buy, which could include commercial, retail, industrial or other properties. Property schemes are also known as a property funds, property syndicates or property trusts.

You’ll find more information on property schemes in the property section of our investing money guide.