People making that argument always ignore the money "wasted" paying interest on your mortgage. Take the time to build a significant deposit, and to do your research on where, and what, to buy to make the most of your investment.

If I was 20 again I would buy somewhere I holidayed at back then and rent or stay at my folks place to save. Then I could use my place on weekends or have time out there.

Even buying just a block of land would have given me the motivation to save for something that one day could be built on.

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Buy..................but still live at home! So you can claim the interest and expenses and you have a foot in the market place. Choose well and choose a "rental" that way you won't invest too much heart, you can get an agent to find you a vetted tenant if you choose to self manage, keep a firm hand on both the agent if you use one and the tenant ;) you may never live in this one but you will learn loads. Hopefully in time you will then have a n asset to sell (less tax) to help you into your "home" purchase. Good luck

@maggiekn - "Choose well and choose a "rental" that way you won't invest too much heart"

Such great advice! I think regardless of how much of a 'rental' it is it will still be significant given it's such a big venture but I'll definitely keep that in mind :)

Never before can I remember property as looking like such a safe investment with the market being such a sound contributor to this healthy, well balanced and robust economy. Get in now girl why the going's good!

I think its worth buying if the property you buy is cheap enough to not be a burden. That is... you could pay it off in a reasonable timeframe so that it becomes an asset and not a debt ( which is essentially what it is until that time). You could consider buying something you could live in and possibly sublet to other roomies, that way you earn some money but save on rent. The rent could help cover the mortgage. Or go for a flat. I think your mortgage repayments on your first house should not be more than what you would pay in rent. Or even something with a granny flat if that's in your budget, and you stay in the granny flat.

We bought our first house 2 years ago after many years renting. It is a very cheap property and so the minimum payments are very low. There are so many benefits we are seeing to owning our home, and after a year the the financial benefits were evident. It is so much nicer than renting. You can fix things when they break, and have the house just as you want. But we are paying close to what we are used to paying in rent so the mortgage is actually being payed off. I think when you are young and don't have other financial burdens or limitations to your earning capacity ( say like when kids become part of your life) then its a great time to save a deposit and set yourself up. Also, I think, what else would you spend the money on? The only thing I can think of that would have as much value is starting your own business, or travelling the world...

I think look to a property that can easily suit a variety of circumstances. You are young and you don't know what is around the corner. If your house is within your means at a basic wage, can be payed of relatively quickly and suit a variety of circumstances from being let out, you living in, selling etc... There is another benefit of having your own place and that's not having to move all the time and all the challenges of that. Renting can be really tough. Its nice to have a place that is all yours. Its a wise choice if you are sensible and conservative in your choice. Always get a building report done as its worth the extra expense, and factor in the cost of property management with an estate agent when considering an investment property. It will be a lot less hassle and stress. Remember you are naive and inexperienced and try and factor that in. Play it safe.

My best advice: Buy something dirt cheap. A house that you pay $80K but sell for $130K is making you just the same profit as one that is $300K and sells for $350K. A cheap house will always sell.... its too cheap to not! Look to paying it off in less than 10 years and see what you can afford.

Don't take it for granted that tax deductions on negative gearing are going to stay the way they are now. Noises are being made about changing them. It might be worth saving a deposit until the next election, to prove saving behaviour to the banks, and see what happens then. Possibly no radical changes will happen overnight, but our governments are looking to save a dollar.

Oh, and I agree with all of the above. I don't envy youth of today, it's very hard.

You should never rely on negative gearing, things can go wrong, but aim to have the rent cover as much of the costs as you can. Pile your own brass in to clear the mortgage as quickly as you can and make the asset work for you. And yes I have done the frugal, the high rates, the working all hours...but I would rather have my sons buying a rental and living home,we can manage to see them well set up.

The only way we could afford to build on our land twice in thirty three years was to live with our parents & pay off the land, first time was for 2 years with no children, 2nd time was for 17 mths with 1 & 1/2 children. It was the only way we could get ahead of the 17% monster wuff speaks of.

I would do it for my children too if I could with conditions of course, being pay rent & utilities & contribute to the communal good with cooking, cleaning etc. Not everyone can offer to help but in our current situation it would work. Our goal is to downsize in the next 3-5 years so then it would be a different story.

I'm with you Wuff. And happy to say that my son wanted to be independent as soon as he was able. Too many stories in the papers about parents living in poverty after co-signing loans, remortgaging etc to help the kids.

Gioenne, you sound as though you want to make your own way. Good on you! But too many young people feel entitled to have more than they are willing to work for.

My big advice would be not to overextend. Budget to cover tenantless periods, good insurance, routine maintenance, and some of the necessities of young life.

Wuff, they started out with good genes.

Marj, And landlord insurance.

He he, you can't win, we had tenants who, amongst other damage in every room, actually pulled a sconce light off the wall. When we lived there, the bed head was under the sconce light.......

Hi Gioenne, I agree with most of the comments above. Ideally, unless you have thought long and hard as to the ideal area you would like to live, I suggest continuing to either stay at your parents for a year or so more whilst saving as much as possible, or possibly renting in the area you are considering investing in. Once a location has been chosen, think carefully about the house you would like to purchase. Will it tick all the boxes for the future. If so, go ahead and purchase a home with the intention of living it in yourself. Most importantly, you can then share the cost of the mortgage by having other people share the expense. This way, you are in control and hopefully the burden minimised by residing with people whose company you enjoy. Good luck with it all.

Yes, jajlynn, the issue is not B&W it's 50 shades of......

OK . . . big decisions coming up for you. My advice would be to buy - but don't rely on negative gearing (i.e. the rent should cover just about all of the costs - not only rent, but insurance and rates, and the agent's commission if you are using an agent). Then, when the tenant is in, save even harder to give yourself a buffer for 'emergencies' (e.g. termite damage, hot water service replacement etc - look at building up a nest egg of at least $10,000). You can really set yourself up well here - but the first years with a mortgage are tough (whether it's for your own house or an investment).

Remember, interest rates can't go much lower and will start going up - if not this year, then the next, or the one after. Be sure you can cope. Is your employment secure? Do you still see yourself in the same company/organisation in five years' time? (You don't want to be without an income if you can possibly avoid it.)

Do you dream of travelling? I did - and I went to Europe three times and America once before I knuckled down to save for my own house - and then it was around seven years before I went anywhere again (and that was interstate). If you buy now, you could find it could be a decade (or more) before a big international trip is possible. Either travel now, or realise that you've put that commitment on the backburner. Equally, is there any possibility of wedding plans? People want to spend a lot of money getting married these days - and that may not be an option for you either.

But, as I said, I'd buy - I actually (amazingly) agree with the treasurer on this one - that interest rates are pretty much at bottom and this is probably the chance of a generation to borrow and invest. Just realise that you are definitely committing pretty much all your financial resources to this for the best part of the next decade.

Good luck!

Many people misunderstand negative gearing - it is losing money on an investment where the loss can then reduce taxation on another income source, such as salary.

For most people, it is much better to make a profit or at least break even.

@fianou, you say "A house that you pay $80K but sell for $130K is making you just the same profit as one that is $300K and sells for $350K."

This isn't actually true. You are ignoring interest, which admittedly most people do when talking about property profits. With the same deposit for both properties, the interest on the mortgage for the $300K property will wipe out that $50,000.

There's another factor. If you're anywhere near public transport to popular private schools, property is selling at double its value to cashed up Chinese buyers. There is a glut of units/apartments in the inner cities here, because of O/S investment, median $400,000 per unit.

Sounds like you have your head screwed on Gioenne and are a good saver. The only path to building wealth is spending (consuming) less than you earn. It does not matter if you are on $20,000 per year or $200,000 per year.

Don't underestimate the fact that for many of us debt does tend to make us more self disciplined and therefore less likely to waste money on a lavish lifestyle (too many clothes, shoes, meals out and homewares) at the expense of our longer term financial security.

Do buy an "investment" rather than bothering yourself with selecting a future "home". Makes the decision a lot simpler and possibly a lot cheaper.

I hate the term ' building wealth'. Think of what you want to make your life a happy one financially. A nice fully owned home by the time you retire is a very good idea. Ask your parents if they mind you living there while you save - my guess is that they won't. Then do your homework and find a modest place that you could live in if you had to and that will be easy to rent out. Then stay at home for a while and be very helpful :)

If you can pay a smaller rent than the mortgage on the property you want with the deposit you have, use deposit saved + regular monthly payments of difference between the rent and repayments to buy bluechips and '$ cost average' (but check valuations with decent broker/advice service (eg Intelligent Investors, Fat Prophets (no affiliation).

Over time, the share market outperforms property... but you MUST invest and not splash the spare cash or this is a complete mugs game..

OR..... Buy to let but do not get OVER GEARED or you could fall over if there is a hiccup in market and you are not liquid enough to cover. Get rent insurance.

If I were young again I would stay at home longer and save my money. Not to buy a house but to travel and see the world before settling down.

When you are ready to put down roots, buy a property and live in it. Too many people today want to be wealthy, when to be happy and content with one's life is more important.

Thanks for all your input everyone - I have LOTS to think about :/

I was in the same position as you. I bought, rented out, lived in, renovated, sold. I did this three times and made good money and now I have built my own house and loving it.

Another thought... the picture changes depending on if you want a house to live in or an investment. I personally favour the idea that a house is somewhere to live and not an investment in the traditional sense. If it makes you some money that great but I don't rely on that.

Write up the different options and put down all the pros and cons and the figures and see what you think. And remember, even if you think it all through and make a really sound choice you can never predict everything. It may not work out quite the way you expect and that's okay too! Spend heaps of time checking out the property pages and the local market before committing to what you want to do and see what you think. Maybe a nice property will jump out at you!

Good luck!

"I personally favour the idea that a house is somewhere to live and not an investment in the traditional sense. " Thats exactly my point fianou, I think most people forget this most important fact of just living simply in a house and enjoying it, not about re selling value and how much it's going to be worth down the track. Strive to be debt free, borrow as little as possible so you can pay it off quick. Try building a 3 x 1 without all the theatre, activity,study,scullery whatnots! You can always renovate later on, there is too much emphasis nowadays on being seen and material possesions and generating wealth, so much so that we have forgotten to simply live & enjoy life.

Buy. I'm glad I did. I now own 3 properties and some friends are yet to buy their 1st. As you get older you'll be glad you made an early start