Determined buyers pivot to handle affordability challenge

Property is a reliable case study of how a market responds to varying economic factors.

Whether you are a buyer or seller, the dynamics that influence real estate rarely change – confidence in the economy, perceptions of job security, mortgage costs, and supply and demand.

Right now, we're seeing buyers pivoting as they grapple with high mortgage rates combined with strong value increases.

Even as the market calms after a prolonged period of price growth, it is still 6.7% higher than 12 months ago, according to industry researcher CoreLogic.

Many buyers want to purchase before values accelerate once the Reserve Bank of Australia (RBA) finally cuts interest rates. So, they've had to reassess expectations and target cheaper suburbs, smaller homes or switch focus to apartments.

Their pivot has translated into a 12.4% increase in the value of homes at the cheapest end of the market. The upper quartile has experienced value gains of just 3.8% by comparison, according to CoreLogic.

Every state capital has seen cheaper homes gain in value.

Apartment values have grown faster than houses in five of the eight capitals – an unusual trend. A sixth city, Melbourne, which has a mildly contracting market, has seen smaller declines for units than houses.

Here are five tips for buyers who face affordability challenges but remain determined to enter the market.

Reassess Spending Power: You may need to switch your search to cheaper suburbs to find your desired property. Alternatively, you can keep your location goal but buy a smaller property or one that might need renovation.

Seek Advice: Consult a mortgage broker to help you find the best loan for your circumstances and ambitions. They will be able to confirm your potential budget so you can accurately assess the type of property and location you can afford.

Long Game: If you're finding your desired location beyond your budget, research the up and coming areas where you might get a better return on your investment. Perhaps some short-term compromises will need to be made, but you could benefit financially in the long run.

Be A Rentvestor: Buy a home in an area you can afford and then rent it out. Meanwhile, you rent in a favourite location. First-time buyers need to watch for rules relating to government assistance before doing this.

Keep Saving: It's important to maintain your savings discipline. Every dollar will help you reach your goal. Paying down debt to increase the potential size of your loan is a great place to start.