How to break into the property market with next to no savings

Saving a deposit can be one of the biggest barriers to entering the property market in Australia. With an average income it can take years to save a deposit, although the situation in Brisbane is better than in Sydney or Melbourne.

Good news though: some of Brisbane’s developers are taking steps to give first-home buyers a leg up into the market, offering savings plans which allow buyers to get on the ladder, sooner.

AVJennings has introduced an initiative which allows first home buyers to save their deposit while their property is being built. 

AVJennings Queensland general manager Tony Creighton said many first home buyers were not aware that they did not need to wait to save their full deposit before making a purchase.

“Our scheme allows buyers to make an initial $1,000 payment and we then work with them to create a savings plan to raise the balance of the deposit required while their new home is being built,” he said.

“Buyers (can also) deposit funds as additional voluntary contributions into their superannuation account to receive tax breaks and accelerate their savings (and) can even use the State Government’s $20,000 first home owner grant.”

One couple who say they wouldn’t be homeowners without this assistance are Shane and Bernice Fortuin, who built a townhouse in Bethania, near Logan.

“We were trying to save a couple of times but every time something would get in the way,” Mr Fortuin said.

AV Jennings helped the Fortuins open a new bank account and worked out a strict savings plan. All it took was a $1,000 upfront payment and the First-Home Owner’s Grant.

“What happened was we just put it into the separate account and we didn’t touch it,” Mr Fortuin said.

The family of three is now in their new home and couldn’t be happier.

“It feels awesome mate, not renting any more and paying someone else’s mortgage,” Mr Fortuin said. “We didn’t believe it at first.”

Townhouses like those offered in Bethania aren’t the only properties you buy with these schemes. Position Property director Richard Lawrence said many developers could be open to similar schemes, on a case-by-case basis.

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“I don’t think it’s widely noted out there,” he said. “But we acknowledge that it’s hard to save.”

Mr Lawrence said his salespeople working on an upcoming apartment block in Brisbane’s CBD were happy to help out those struggling to put together a deposit for an apartment.

“There’s a certain part of the industry that says ‘I don’t want to do that, it might fall over’,” Mr Lawrence said. “But we find that once people pick a house and fall in love with it and they have goal to achieve.”

That’s not to say anyone with $1,000 in their back pocket can walk into a home loan on a brand new apartment, though. “If someone didn’t have a job and didn’t fit normal finance criteria, we wouldn’t enter into that agreement with them,” said Mr Lawrence.

Domain Media chief economist Andrew Wilson said the willingness of local developers to enter into these agreements showed how tight the Brisbane market had become.

“It shows how competitive the market is, doesn’t it?” he said. “It’s just a process of trying to get more sales.”

Dr Wilson said it was worth it for first-home buyers to shop around with developers to work out what schemes were on offer.

“It’s a great opportunity for developers to get you into the marketplace,” he said. “They obviously want to help those who don’t have a deposit.”

There’s risks involved, but they’re mainly on the developer, Dr Wilson said. “It’s up to them to monitor and sift through the positives of the particular buyers they’re giving credit to and I’m sure they’ve got a rigorous process for doing that.”

“Whatever happens, you’ve got skin in the game.”