How to be a smart first home buyer

No property buyer is more nervous than a first home buyer. Generally scared about what having a mortgage is going to do to your quality of life, there are also the dauntingly high stakes of deciding where to get onto the property ladder.  

A bad decision can cost money and cause angst in a whole host of ways. What if the property’s value drops? What if the property doesn’t grow in value? Or doesn’t match the median growth rate for that suburb? What if you could have done better by buying in another area altogether?  

This is a purchase for the future, not just a home for the moment. You want to make the right purchase so you can be best prepared in the years to come as your needs change or family grows. There are two main options here. The first is to buy something small in a great area with the intention of selling and upgrading after 5 or so years. The second option is to head straight for the ‘burbs and buy a place that you can grow into. But at what cost? You might be forgoing capital growth along with your child-free lifestyle! In order to make the best decision, you will need to weigh up the tradeoffs of reduced capital growth prospects versus the cost of selling and buying in order to upgrade down the track.

Basically, if you look at any ladder, the goal is to get as high as possible. If you can reduce the steps (by making the rungs further apart or by taking two at a time), then you are going to save money in the long term and climb higher in a quicker timeframe. With all the high costs of buying and selling, it makes sense to reduce how many property transactions you make over your lifetime. So the longer your first home will suit your needs, the better.

A solid piece of advice given to first home buyers is to stretch as far as you can afford (no more takeaways!) as the time before you have kids is the best time to build a solid foundation in the property market. By working a bit harder now, it could mean that further down the line you’ll be more comfortable. You may not need to upgrade so soon if you buy the largest home you can afford now, or you may not be forced to move out of your favourite suburb to find more affordable space. Alternatively, if you stretch to buy in the best area that you can afford, then you will have a greater chance of higher capital growth than if you compromised and bought in a lesser area. Sometimes, however, you will need to buy a smaller property in order to achieve this.

This is all hard to weigh up when you don’t have a crystal ball! The best bit of advice I can give you is to look for capital growth when choosing your first home. A property that grows in value will give you options down the track and will help you stay ahead of the market.

So, how do you buy a good performer? Get professional help! We help many first home buyers through this scary yet equally exciting phase of their lives. With budgets usually tight for first home buyers we do find it’s sometimes difficult for many young people to part with their funds required to engage our services. So if professional help is not an option, you will need to do the research yourself.

Really get to know your chosen market and see for yourself which properties attract a lot of buyer interest and which ones don’t. You will probably have to compete harder for a property that will be a high performer. A lousy property will be pretty easy to buy and if it seems cheap, that’s generally the reason why.




Published:- 5 July 2016


Please note: Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.


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