Housing affordability is at historic lows in many areas of the state making it increasingly challenging for those who have yet to find their own patch to call home.

Over the past 12 months, the number of first home buyers as a percentage of the total buying market has declined, and according to the Real Estate Institute of Queensland (REIQ), many of those who have made it into the market have needed to employ creative techniques to get their foot in the door of their first home.

Co-buying
Co-buying – also known as shared ownership, joint ownership or co-ownership – is when two or more people decide to spread the financial burden and buy a property together.

Parents are buying with their children; siblings are buying together, as are friends, extended family members, even colleagues.

By joining forces, you can afford somewhere bigger, better and sooner than you could alone.

For investors, the obvious advantages include the reduction in capital required, the reduction in other associated costs involved in buying a property and, as a result, the reduced risk, especially when better locations can be made more accessible.

“It is important to remember that a mortgage mate, a co-buyer or a co-investor is in essence a partner," REIQ managing director Dan Molloy said. "There are significant legal and financial obligations to consider and plenty of due diligence is called for.”

“It is vital that all parties have the same intentions and goals and a legally prepared document – such as a Deed of Trust – is advisable for anyone entering into a co-buying arrangement.”

Mum and dad finance
Baby boomer parents are increasingly helping their children into the property market. Creative ways they are giving their children a “leg up” include co-buying where the parent(s) provide the equity and the children take responsibility for paying the debt.

The other arrangement is by way of a guarantee. The traditional bank guarantee has been replaced by a product that allows a parent to guarantee an amount to supplement the borrower’s deposit.

The size of the guarantee can be limited to a specific amount which protects the parent from losing their home should the child default on the loan.

“While declining housing affordability is making it increasingly difficult for first home buyers, as the Queensland property market is taking a breather from its strong results of last year, opportunities currently exist for buyers who can afford to enter the market,” Mr Molloy said.

“Given the relative stability of the current market, the REIQ encourages anyone who can afford it to buy property to secure their long-term future. However, they must be able to afford the property and the ongoing costs.”

To find out if a real estate agent is from a REIQ accredited agency, go to www.reiq.com.au.

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