Wen I wrote the first version of this article in 2014, I was bullish on teens still being able to do what I did - buy a property at 19.

I was also foolish.

I had less appreciation of the impact of systemic effects on our outcomes, not to mention family support. Often they’re a bigger contributor than your personal get-up-and-go. It’s been reassuring to see how far I’ve come in understanding how personal finance works. I’m feeling very lucky to have been 19 in 2001 instead of 2024. Winning the ovarian lottery had a lot of do with this experience.

Today, I'm less confident a teen could do what I did.

I think they should still try if they’re keen and have the resources to do so. But, I think other investments are a more accessible starting place for young people than property. I've reworked the latter part of the article as a result.

I left the story of my experience mostly the same. It can serve as a time capsule of what life was like two decades ago (gulp - when did I get so old?)

And who knows - maybe it'll be possible for teens to do something similar in the future.

When I was saving half the income from my part-time jobs, I planned to buy a flashy car. I dreamed of driving that car in the finest clothes, on my way to a swish restaurant.

I had no expectation of my savings helping me buy a property before I’d finished my second year of university.

...but it did.

I traded the dreams of flashy car, clothes and restaurant for a small, dingy apartment. In that apartment, I wore clothes encrusted with paint and ate microwave dinners. I was 19 years old at the time. As usual, I have my mother to thank.

To get specific: in November 2001, I became the proud owner of a two-bedroom, one-bathroom apartment. It was near my university, in Taringa - a suburb of Brisbane, Queensland.

I paid $103,500 with a loan of $75,100 and no guarantors.

A single bloke was renting it for $120 a week, and it was hideous. When I finally got in there, I found myself enclosed in a brown box and my pride evaporated.

I cried. A lot.

Till then, I was living at home with Mum. I was studying, in my second year of chemical engineering (a four-year degree). I worked two jobs part-time: gymnastics coaching and after-school care. I was also doing the bookkeeping for my old high school’s uniform shop on a casual basis. I had secured vacation work at BP Refinery for $800 a week for the next 12 weeks.

So, how on earth did a uni student qualify for a $75k loan without a guarantor in 2001? Especially one with no assets besides my deposit and no credit history?

An excellent question. Here's the answer:

How I did it

There were three contributing factors to getting this loan back then:

1. Undervalued asset

The unit was for sale at $130k for a loooooong time.

The owner was keen to sell, so instead of hurling abuse when I offered a ~20 per cent discount on that value, he signed. Imagine my shock!

This was an excellent deal and I was very lucky. It was my first offer ever. Not for want of trying. Mum and I had been looking at similar apartments every week for the last six months.

The bank also knew a lot more about the property market than we did. Maybe they had an inkling that prices were set to double in the next year. Which they did.

Either way, this property must have looked like a pretty safe bet for the bank.

2. Family help

I couldn’t have done this by myself. I relied on several people to get this done, the most notable of whom are:

My grandparents: an advance on my inheritance was essential.

The $15k they gave me was the dealmaker. The Bank of Mum and Dad expanded a generation for me. More on that next.

Mum: it was her idea in the first place.

I would never have dreamed it was possible until she started egging me on. She held my hand the whole way, through every home open, the contract negotiations, the mortgage application process. Everything.

Without her support, I’d have been in the flashy car and still living under her roof. Hmmm, perhaps that was her motivation…

Dad: I give my dad a lot of crap for being bad with his money, but he was great with mine.

He did the building inspection and haggled another $1,500 off for repairs. He helped my transform the unit over the summer with my meagre budget of $6,000. His carefully planned renovations turned the unit from a brown box into a light, bright home that I loved. Without his help, I’d have cried myself to sleep every night.

Dad also lined up a family friend who was a lawyer to act for me in the conveyancing. In retrospect, this turned out to be expensive ($3k+) so perhaps not as helpful as I thought at the time.

Mike: the boyfriend of a school-mate. A bank loans manager.

Mike guided Mum and I through the mortgage application process. We got approval with amazing speed. He was so exceptional that he was my go-to guy for my next loan application in 2004, which he turned around in 48 hours. What a champ!

3. Convincing application

The mortgage application was make-or-break for this deal. I know Mum lost more sleep over it than I did. There was some creativity (cough, cough) required.

For instance, you may be wondering where a 19-year-old gets $30k for a deposit. Yes, I had family help.

• $15k came as an advance inheritance from my grandparents. My mother had to sign a letter explaining that it did not have to be repaid. This meant she didn't have to be a guarantor (which would have limited her borrowing capacity).

• $8k came from savings from my part-time work from 14 years old.

• $7k came from an investment account in my name when I was 10. All the cash gifts I’d received had gone in, and some of my part-time work savings over the years.

So it wasn’t all me.

I was very lucky to have family who could find $15k to gift - thank you ovarian lottery. Showing how good I was at saving and my willingness to work my bum off to earn decent cash contributed to their willingness to do so. They wouldn't have given me the money if they thought I'd waste it.

As with most young people, my balance sheet was bare. Beyond the money for the deposit, I didn’t have any cash. But I also didn’t have any debt that I needed to service right then – not even a credit card.

I did have a student debt for my study costs (HECS). Repayments don't kick in until you earn above a threshold income, and I wasn't there yet.

I was also eligible for the First Home Owner’s Grant. Back then, it was $7k for an established home. You got $15k for a new home. This $7k was a given even though I couldn’t get it till after settlement. It boosted my balance sheet.

As for cash flow: In June that year I became eligible for Youth Allowance through CentreLink. The rate would double to $192 a week when I left home. Because the apartment was to be my principal place of residence (PPoR), it didn’t count in the means test.

I also had the letter of offer for my vacation work with the salary of $800 a week to show as my income. The company worded the letter so it looked like a long-term position (which it could very well have become… eventually). I’d had a taxable income above $10,000 the prior financial year, so I looked like a good bet for a 19 year old.

Also, I lived like a student – my living costs were miniscule.

So the bank ticked its boxes:

• An undervalued property which they could sell at a price sufficient to recover the debt,

• Deposit big enough to avoid the need for mortgage insurance, and

• Cash flow to service the debt without starving me.

Everyone was happy. At least, everyone but me until the renovations!

What happened next?

For six weeks after I took possession of the apartment, I worked on weekdays at my vacation employer in Pinkenba.

Then I worked for three to six hours every weeknight and all weekend on the renovations.

I had to apply filler to 50 square metres of tongue-and-groove ceiling, losing my fingerprints temporarily in the process. It took four coats of paint to overcome the brown beams.

I was also the lackey.

My father, being a skilled builder, simply does not DO some tasks… like cleaning up. So I followed around behind him and the friends from whom he had called in favours. They ripped out and replaced my bathroom, tiled the common areas and installed new carpet in the bedrooms.

For a few weeks there was no toilet in the apartment. I made frequent visits to the Hungry Jacks down the hill to avail myself of their facilities. I also learned how to perch over the laundry trough when HJs closed (so ladylike). It was filthy, repetitive work but rewarding – I had with a fabulous new home.

As soon as I was ready to move in, I advertised for a boarder for the second room at $90 a week including water and electricity.

My first housemate, Michael, stayed for a year. He subsisted on baked beans and tinned spaghetti. His lovely girlfriend (now wife) was clearly a very tolerant woman.

After that, I had Sam stay with me for six or so months. He was a young Muslim guy and a lot of fun to have around. Then he fell in love and moved in with his girlfriend, so I found Kerry, a Kiwi lass training as an opera singer. She stayed until Christmas of my second year in the apartment.

By then, I had graduated from chemical engineering at UQ and had a job offer in Kalgoorlie.

I left Queensland, keeping the apartment and renting it to a lovely couple I’d met at uni. After two years, they bought their own place and I turned the unit over to an agent. In 2014, it was renting for $315 a week and the value was estimated between $300k and $350k.

Because it’s fairly indestructible, it was low cost regarding maintenance. Just the occasional water heater replacement, air conditioner re-gassing etc. I put in a new kitchen before the agent took over. Actually, I did nothing – I just paid the bill and saw the kitchen in person two years later. It was great.

Having that apartment allowed me to secure a $170k loan for my home in Kalgoorlie in 2004 with no deposit. The equity has been of benefit to every loan application I have made since. I thank my lucky stars that I bought it.

What did I learn?

Looking back, I can hardly believe the audacity of a 19-year-old student buying a property. Even with all that help.

I recall the shocked looks on the faces of my lecturers and parents of my friends when I told them. People didn’t seem to know what to make of it. Perhaps they didn’t want to share what they were thinking because it wasn’t complimentary. My boyfriend at the time was less subtle: he thought I was crazy. That relationship didn’t last a month beyond settlement.

The lessons from this experience have been innumerable and profitable for me.

Here are some which stand out in my mind:

Negotiate!

You make your money when you buy a property, not when you sell it.

Be willing to fight for the best price you can get and to walk away if the stakes get too high. My father’s haggling saved me $1,500 I would otherwise have had to cut from my renovation budget. Goodbye shiny new bathroom!

Ignore the nay-sayers

Tall poppy syndrome is rife in Australia.

If people think you’re getting a bit big for your boots, they’ll cut you down in a hurry. This can damage your confidence when you’re young and about to attempt something new. Have faith in the numbers. Ignore those ignoramuses, especially if they're not experienced in what you're trying.

Get in early

Imagine if I’d hesitated for even three months?

I would have had to pay $200k instead of a little over $100k for the same apartment. I doubt I could have convinced the banks then.

Property goes in cycles, but if you’re holding for the long term those even out.

Cosmetic changes can make a huge impact

Painting and putting up new curtains made the apartment seem liveable (and stopped my tears).

Some people can’t see past poor presentation that is only surface deep. Have the guts to buy something that looks run down (making sure there are no structural issues of course). Chances are you’ll have less competition.

Take boarders to help with the mortgage

Know what the difference between the mortgage and the rent from my boarders was? $40 a week.

You couldn’t rent a room in a hovel for that little at the time. A room in a share house was circa $100 a week.

It was cheaper to own than to rent on a weekly basis because I was willing to forgo some privacy. It wasn’t forever, and I stopped house sharing in 2006. But it’s an excellent stop-gap when you’re getting into the property market.

Then vs. Now

I love talking about property, so I end up chatting about it with lots of people.

Whenever I tell this story, reactions vary. From my peers who still don’t own a property but wish they did, I hear: "Gee, I wish I’d bought when you did."

From young people, I hear: “But it was different then. Property is so much more expensive now."

They're right.

I bought this property 23 years ago (I'm editing this in 2024). The world has changed when it comes to getting loans. Most of the changes make it harder to buy that first property. However, some things remains the same.

So what’s changed from then to now?

Worse: Tightening lending rules

Thank you, sub-prime mortgages in the USA for making loans harder to get for a while in Australia following the Global Financial Crisis (GFC).

Then, a sarcastic thanks to the banks themselves for the conduct that means we need responsible lending laws (see: Banking Royal Commission).

A 19-year-old today would be hard pressed to get a loan on the same terms as I had.

Worse: Housing affordability

There is no doubt that that house prices in Australia have risen in the last two decades, and continue to rise.

They rose the decade before then too. In fact, on average they seem to rise most years. The problem is, the rising price outstrips what we earn because wages don't grow as fast.

We measure housing affordability through the ratio of house price to average earnings. Take the average house price, divide it by the average wage, and you've got your number.

Prior to the 1980's, that ratio sat at around three to five across Australia. So, in three to five years, the average person would earn the same amount as the home cost.

By the early 1990's, the ratio hit nine.

In 2024, it's sitting at 16.5.

(Source: Housing affordability is so bad that 2020 (!) now looks good, by The Australia Institute).

I was very, very lucky to get in early when affordability was better than today.

Of course, the ratios vary with location. Capital cities on the east coast tend to have the highest ratios. And every property is different. But on average, it's less affordable than it was for me.

Worse: Expectations

It blows my mind that people expect to buy their dream home as their first purchase.

Or, they think they shouldn’t have to take a boarder because they don’t want to share.

Or, they’re not willing to compromise on their lifestyle in the short term. They must own in this hotspot suburb instead of the daggier one next door.

Where do these unrealistic expectations come from? Are they a product of marketing? Are we just so hell-bent on instant gratification that we don’t realise these homes become perfect after someone puts in the time and $’s to tart them up?

The property ladder is real for most of us.

You start at the bottom, or at best somewhere in the middle. You don’t jump right to the top without a windfall of cash.

For reference: my husband and I bought our first intended home in 2014 - 13 years after my first property. It was my sixth purchase. It’s by no means a ‘dream’ home in the magazine-quality sense and it’s tiny compared to most in our suburb, though it suits our family beautifully.

Same(ish): Interest rates

I found my Consumer Contract Schedule for this property and saw my introductory interest rate was 4.89 per cent in 2001.

In 2006, I signed a contract at 9.5 per cent.

Rates have gone as low as 1.89 per cent in recent years, and are currently (mid 2024) sitting around 6.5 per cent. As orders of magnitude go, we're within a 'normal' range. It's a far cry from the early 1990's 18 per cent mortgages.

Same: Urgent sales

Every circumstance is different, but there are always people desperate to sell, and willing to take a lower price to do it now.

Divorces, deaths, redundancies – these items force the hand of owners sometimes. Sellers rushing can mean good deals for buyers, if you’re willing to hunt for them.

(I know this is an ethically questionable point for some people. I’m sticking with it.)

Same: Ugly places sell cheaper

When I was looking for apartments in 2001, there was a black and white ad in the paper, text only, with the basic stats. You had to go to the home to see if it was any good.

The rise of the interweb makes that process a lot more sophisticated.

Marketing is critical. The pictures of the home for sale have to look like they come from the pages of a magazine to get a reasonable number of clicks. This translates to more people attending home opens.

From the comfort of my home, I can check the lay of the land from Google Maps. I can download a full property report including the sales history for less than $50, or get the short version free on realestate.com.au/property. The average buyer can do a lot of research to narrow down the places they’re willing to look at.

This can be to your advantage if you’re willing to check out the places that don’t look great. The ones with old kitchens, scruffy yards and a poky little laundry. Be willing to check out the ugly places and you might find a bargain.

Where to from here?

If you’re determined to buy a property, here’s some points to consider:

1. Buying a home is not always the best financial decision. Renting the lifestyle you want while investing elsewhere can work. Sometimes it can even be the better financial choice.

2. Get real about what you can afford. Don’t expect to buy your dream ‘forever’ home first off. You could aim to buy something you can keep as a rental later, when you’re ready to move up the property ladder and can afford to. Check your balance sheet so you can present a convincing case to the bank when the time is right. Don’t go to home opens in the bracket above your affordability.

3. Waiting can be costly. If you’re planning to hold your property for decades, odds are reasonable that prices will rise. The longer you wait, the more expensive it is to get in, and the less value your savings (thanks, inflation).

4. Practise negotiating. The price you pay for your property is critical. Be prepared to be uncomfortable as you negotiate the best price you can. Shortlist properties and make audacious offers – 15 to 20 per cent below the asking price. Be prepared to be hung up on, yelled at and kicked out the agent’s office. I’ve had all three, and after the first time it’s not so scary.

About Money School

If you’re new here, welcome! Delighted to have you 😁

This is the blog for Money School, an Australian financial education company.

The main site is at https://www.moneyschool.org.au, but I keep our articles over here on beehiiv.

Everything on the main site and this blog is for educational purposes only. I’m not a financial adviser, nor do I play one on Netflix. I aim to help you learn about money so you can ‘choose your own adventure’.

Money School was co-founded in 2010 by me (Lacey Filipich) and my mother, Fran White. Money School offers workshops, online courses and have an international award-winning book, published with Penguin Life in 2020.

I’m also a regular media commentator on all things personal finance. If you’ve got 16 minutes to spare, you might like to check out my TEDx talk (over 1m views!) on financial independence and mini-retirements.