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IT IS tough out there for first home buyers. Rising house prices and fierce competition have made a deadly cocktail for those desperately trying to get a foot on the property ladder.

And with a new study claiming that if you haven’t become a homeowner by the time you’re in your late 40s, chances are you never will, the pressure to break into homeownership is building.

A sobering thought considering statistics released by the Australian Bureau of Statistics (ABS) this week revealed first home buyers now make up just 13.4 per cent of all owner-occupiers in Australia — well below the long-run average of 19.4 per cent.

But if you’re a struggling first home buyer, you don’t have to lie down and quit just yet. You’ve probably already heard of ‘rent-vesting’ — a strategy whereby first home buyers are getting into the property market by renting where they want to live and buying elsewhere.

But what you probably didn’t know is that you don’t necessarily have to buy in fringe areas 60km out of the city.

Nidal Rasheed, the founder and managing director of Silvertail Property Group, said Adelaide has become the antidote first home buyers had been searching for.

With a median house price of just $440,000, but the largest house price growth across the capital cities, first home buyers can afford to rent-vest, or own, their way into the property market while still purchasing near the CBD.

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“When you think about the median wage — the average person earns about $70,000 to $80,000 — if they were to buy in Sydney that is nearly 12 times what they would make annually. Whereas in Adelaide, it is only five to six times what they earn. It is still quite comfortable,” Mr Rasheed told news.com.au.

“The biggest reason I have seen a lot of investor interest in Adelaide is because you can buy two properties in Adelaide for the price of one in Sydney.”

Adelaide is certainly much more affordable, but what makes it a safe investment choice is its growth prospects. In September, Adelaide’s median house price increased by 2.3 per cent, compared to Sydney’s 0.8 per cent — and increased investment in infrastructure driving demand in the city will see that price growth continue.

“We are starting to see a lot of investment in the CBD. The Adelaide Oval has been recently developed and we’ve got a new hospital getting built,” Mr Rasheed said.

“There is a big drive for international students to come to the city and study as well. All of that is placing a lot of demand on property but there is only so much supply that could accommodate that demand. That’s why we are finding there is an upwards pressure on pricing at the moment.”

Investors in Adelaide can also expect much more attractive gross rental yields than in Sydney or Melbourne. CoreLogic figures show investors can achieve a gross yield of 3.9 per cent for a house in Adelaide. This compares to 2.8 per cent in Sydney and Melbourne.

“For something reasonable, [first home buyers] can buy a good quality property within a reasonable distance to the city that will have a good yield and good potential for capital growth,” Mr Rasheed told news.com.au.

 

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