THE FAMILY HOME
Choosing a family home
Homes as an investment
Pros and cons
Other practical aspects of home ownership
Gender and home ownership
Retirement and the family home
Intergenerational financial planning and the home
Facts and figures on home ownership
It is hard to think of any person who has achieved financial security without owning at least one piece of residential property – typically the family home. Most of the people we see either own a home, are in the process of owning a home, or aspire to owning a home. This is why we make owning a family home a key aspect of our advice.
When we see clients who already own a home, they often ask us common questions. These questions include: Should I sell my existing home? Should we renovate? Is it protected if something goes wrong (especially important for self-employed clients)? Is my home included in my will? Should it be? Should I use the home as as security for an investment loan? Should I use my home as security for my adult child’s home loan? The list goes on.
For clients who do not already own a home, some common questions include: Should I rent or buy? Should I buy something affordable for now, pay it off fast and up-grade later? Or should I buy something for more than I can comfortably afford now and simply work harder than ever before? Should I invest in shares instead, buying a fixed amount every month rather than paying off a home loan? Should I buy a business first?
These are all great questions. And we have decided to produce this ebook as a way of helping you find answers to them.
Buying a home has never been a bigger issue for many Australians. We see this in the fact that Australia’s historically high rates of home ownership are falling. Home ownership rates have fallen from 71.4% to 69.5% since the 1990s. Australia is one of only five OECD countries where home ownership rates fell during this period.
That said, you could argue that this is not actually much of a drop, particularly as the population grew strongly during this period and home prices grew even more strongly. Housing may be at a time of low affordability, but 7 out of 10 Australians still own one.
Owning a home, and variations on the theme, is typically a major point of interest amongst clients of all ages. What’s more, the home remains the greatest store of wealth for most clients. Super is catching up, and may one day overtake home ownership as the most valuable asset for most people. Certainly, some people are trying to argue this. However, it is likely that as average super balances grow average home values will also grow, due to a wealth effect between these two asset classes. That is, people will be more willing to take on larger loans to buy ‘more home’ as their super balances rise. And as older members of the community pass away, their adult children inherit their wealth, and typically use at least some of it to finance a home. Wealth in other areas of the economy always tends to find itself at least partly invested in the residential property market.
Such is the importance of the family home in people’s thinking: people feel wealthier the better their home is. As a result, if the economy keeps growing, then the value of the average home is likely to keep growing as well.
Please feel free to share this ebook with any other person who you think would find it beneficial. And, if you would like to discuss your own situation, please do not hesitate to contact us.