The Million-Dollar Property Dream: Are You Buying More Than You Can Afford?
Owning property has long been seen as the great Australian dream. But in recent years, that dream has come with an eye-watering price tag. Many Australians are now sitting on million-dollar mortgages that they simply can't afford, drowning in debt and struggling to make their repayments.
The question is: are we chasing a dream that is turning into a financial nightmare?
The Trap of Borrowing to the Max
One of the biggest mistakes people make when buying property is maxing out their borrowing capacity. Just because the bank says you can borrow a certain amount doesn’t mean you should. The focus shouldn’t be on how much you can borrow, but on how much you can comfortably afford while still having surplus cash flow to allocate towards other financial goals.
A mortgage should fit into your life—not take over it. Buying a home should allow you to live comfortably while still having the financial freedom to:
Invest for your future
Take holidays and enjoy life experiences
Upgrade your car when needed
Spend time with your family without financial stress
A manageable mortgage gives you balance. A stretched mortgage locks you into a cycle of financial stress, limiting your ability to make choices beyond just making ends meet.
The Social Media Illusion
Social media has fueled an unrealistic standard of homeownership. We’re constantly exposed to images of luxury homes, high-end renovations, and seemingly perfect lifestyles. It creates an illusion that we should be able to have it all—huge homes, stylish interiors, frequent travel, and no financial worries—all without sacrifice.
But the reality is, behind many of those glamorous posts are people struggling with massive debt, living paycheck to paycheck just to keep up appearances. The key takeaway? Build a financial plan that aligns with your values and goals, not what looks good on Instagram.
Making Financial Decisions for YOU
Too often, people buy a home or invest in property based on external pressures—what their family expects, what their friends are doing, or what they think will impress others. But homeownership and investment decisions should be made based on your financial situation, your risk tolerance, and your long-term goals.
Ask yourself:
Will this mortgage allow me to still enjoy my life, or will I feel financially trapped?
Am I buying this home because I love it, or because it meets someone else’s expectations?
If I’m investing, have I considered how it fits into my broader wealth-building strategy?
The Investment Property Rush: Are You Really Ready?
Many Australians are eager to jump into property investment without truly thinking through the implications. The idea of building wealth through real estate is appealing, but not everyone is financially prepared for the risks and responsibilities involved.
Before buying an investment property, consider:
Do you have enough cash flow to cover mortgage repayments even if the property is vacant for a period?
What is your risk tolerance? Are you comfortable with the ups and downs of the property market?
Have you explored other investment options that may suit your situation better?
Property can be a powerful tool for wealth creation, but only if it’s done strategically, with a clear understanding of the risks and costs involved.
The Hidden Costs of Homeownership
Many buyers focus on the purchase price without factoring in the ongoing costs that come with owning property. Before committing to a mortgage, be aware of both the initial and ongoing expenses:
Initial Costs:
Deposit (typically 10-20% of the property price)
Stamp Duty (this varies depending on your state and property value)
Legal and conveyancing fees
Building and pest inspections
Lenders Mortgage Insurance (LMI) if your deposit is below 20%
Moving costs
Ongoing Costs:
Mortgage repayments (which can increase if interest rates rise)
Council rates and water charges
Strata fees (for apartments and townhouses)
Home insurance
Repairs and maintenance
Property management fees (for investment properties)
Land tax (for investment properties above certain thresholds)
Vacancy periods (when tenants move out and you need time to find a new one)
The Bottom Line: A Home Should Work for You, Not the Other Way Around
At the end of the day, your home should support your lifestyle, not hinder it. Before taking on a mortgage, take a step back and ask:
Can I comfortable afford this mortgage while still investing and enjoying life?
Am I making this decision for me and my family, or for external validation?
Have I considered the full financial impact of homeownership or investment property ownership?
By being strategic, realistic, and financially prepared, you can turn homeownership into a blessing, not a burden. The Australian dream is still achievable—it just needs to be approached with financial wisdom rather than emotional impulse.
About the Author
John Cachia is a seasoned financial adviser and dedicated parent of three boys. With a passion for financial literacy and wealth management, John has been in the industry since the young age of 14. His early start in finance has provided him with a wealth of experience and insight, which he now uses to guide families towards achieving their financial goals. As Australia's leading wealth adviser for young families, John is committed to helping parents become positive financial role models for their children, ensuring a secure and prosperous future for the next generation.