Question:
Now that property is so expensive, how does anyone get the money to buy in the first place? Obviously once you have already bought property, you can sell it for a more expensive one. But as a young person, how do you save up for that very first home?

Answer:
You can only build savings through hard work and discipline, no matter your goal.

Until recently, you would need enough money to cover your bond registration and transfer costs, as well as a deposit to put down on the property you intended to buy. Banks have now introduced homeloan packages aimed at the first-time buyer, where you will be able to borrow 108 percent of the purchase price. The extra eight percent is so that you can cover the extra costs that are required upfront.

However, it's still a good idea to save up as much as you can first, because you'll save on the interest you have to pay. Banks will consider you a better risk and offer you a lower interest rate. You'll also be borrowing less money.

If you already have some money saved, you will also be able to afford a better property than otherwise.

How to save up that deposit

There's no shortage of savings vehicles out there! You could look at a fixed deposit account with your bank, a money market fund, or government retail bonds. Both of these offer good interest rates for very little risk. If you want to buy a house within the next two years or so, you should consider one of these.

For good growth, despite inflation, you need to look at buying unit trusts, which will give you exposure to the stock market even if you put away a relatively small sum each month. You need to be prepared to stay invested over the medium term (five years or more) for the best results.

If you're aiming to buy property, try putting away even a small amount each month towards this goal. You can save it in an ordinary bank account or 32-day notice account until you have enough to be able to transfer money into an investment that pays higher interest. Keep at it, and don't be tempted to touch those funds.

Remember that monthly home loan payments should not exceed 30 percent of your monthly salary, in order for your purchase to remain affordable and for the bank to be confident you won't get into difficulties.

Buying with someone else

Many first-time buyers find it's much more affordable for them to buy with a partner: a sibling, close friend, or, commonly, boyfriend/girlfriend or spouse.

This makes sense for a lot of reasons. Because two people will be sharing the costs, the bank views you as a better risk and is more willing to grant a loan. Property is expensive; many people wouldn't be able to afford to buy on their own.

But you do need to be aware of the risks. If your relationship ends, what will happen to the investment? If you divorce, who gets the house? For this reason, it's always best to draw up a legal contract stating what each party's obligations are, how much each has paid in, and the split between you, which isn't always a 50/50 split.