The
next year or two will likely be characterised by first homebuyers entering the
housing market.
This
will be in part thanks to Australia’s hugely strong population pyramid in the
25-35 years old age bracket, and partly due to a raft of government incentives
to bring first-timers into the market.
This
is potentially exciting news for first homebuyers, but with Aussies moving less
frequently than they once did, it’s more important than ever that the first
purchase is a smart one.
Here are the 6 tips every first homebuyer must consider
1 - Grasp the basics
Buying
a home is a unique financial decision, usually involving loans (mortgages) made
under unique conditions, that most of us make only on a handful of occasions in
our lifetimes.
Generally speaking, property has tended to work better as a longer-term hold, because if you buy and sell too often the transactions costs (such as stamp duty) can become quite painful.
You can use our free WeLearn tools and download our free propertyinsiders’ book to equip yourself with as many tools as possible to make the right choice.
2 - Look for scarcity
At the
time of writing there is something of a shift away from the Central Business
Districts underway, as Aussies move outwards in search of space.
This
could be of benefit for first homebuyers, who traditionally buy further afield
in outer suburban estates or in regional centres as their first step onto the
housing ladder.
Property
prices are driven by supply and demand, so you should consider where there
might be an oversupply of new dwellings being built.
You can access our oversupply risk hotspots report for free by subscribing for this article here.
3 - Secure
appropriate financing
Most
first homebuyers will need a mortgage pre-approval before they are in a
position to buy.
Speak
to a licensed mortgage professional about how much you can and should borrow,
and seek advice on whether you qualify for any first homebuyer incentives that
may be appropriate for you, such as deposit schemes or stamp duty exemptions.
At the
time of writing mortgage rates are at the lowest level in living memory, but
this will not always remain so.
Therefore you should run some numbers with a licensed professional to ensure you aren’t borrowing more than you can comfortably afford to repay, especially if interest rates move higher in the future.
4 - Research
in greater depth
Once
you have a budget and price point in mind, you need to undertake more in-depth
market research.
The best way to go is normally to take a top-down approach.
You
can use our unique proprietary WeIntelligence tools to get the
insider’s edge for free.
Use
our WeIntelligence tools to access free property valuation
reports, to identify higher and lower risk areas to buy in, and to access our
free detailed market reports on all the sub-regions across Australia.
These are unique research tools to BuyersBuyers.com.au, and you can access them all for free here.
5 - New
isn’t always better
Buying
new property is attractive to first homebuyers for obvious reasons – all of us
tend to like things that are new and shiny – and often incentives are put in
place to encourage first-timers to buy new.
However,
it is important to understand that statistically speaking more people lose
money when buying new property.
Why is
this so?
Partly
because, like buying a new car, you tend to pay a price premium to buy new,
which effectively represents the developer’s profit.
But
when you come to sell, the property is no longer brand new, and therefore there
may have been some depreciation in the price.
The
risks tend to be higher for properties that are not built yet and are bought
‘off the plan’, since there are more unknowns, and there’s the potential for
defects or other unforeseen issues.
This doesn’t mean you should always avoid new properties, but you need to understand the risks involved and perform your due diligence accordingly, including background research on the builder or developer in question.
6 - Do
your due diligence
If
you’ve never bought a property before it’s critical that you understand and
execute a due diligence process.
This
might include, for example:
- researching
all comparable market sales to ensure that you don’t overpay
- using
an expert conveyancer or solicitor to confirm all relevant searches
- checking
for nearby development approvals
- carrying
out the relevant building and pest inspections
- understanding
local market trends
- where
relevant, conducting a strata search or body corporate report
Please
note this list is not exhaustive and you should never sign anything
until you fully understand the purchase process and terms, including settlement
terms.
Buying
a first home is a very exciting step for Australians, so spend some time
educating yourself to make sure that your first step onto the ladder is a smart
one.
If you'd like full-service assistance from one of our licensed and trusted buyer’s agents, including market research and potentially sourcing 'off-market' deals or silent sales which most buyers never see, please see our WeFind service here.
If you know where and what you want to buy, but your budget doesn’t
extend to paying for a full service buyer’s agent fee, please see our more
affordable WeBuy service here, which can help to negotiate
thousands off your purchase price and de-risk the purchase exercise for you.