Price pullbacks in the Sydney and Melbourne property markets have created an opportunity for first-home buyers, particularly those with deposits ready.
Values in most capitals are expected to remain relatively flat throughout 2019, with some cities anticipated to post moderate gains, according to Domain’s Property Price Forecast. That gives prospective purchasers something they haven’t had in years – breathing room to make decisions.
First-timers are also facing less competition from investors, many of whom have left the market in response to tightened lending restrictions and reduced opportunity for short-term capital growth. This has created a window for first-home buyers to secure a home before price growth accelerates again.
First steps for first-home buyers
Changes to lending means first-home buyers should initially seek to understand their borrowing power before going too far with their search. What you were able to borrow six months ago is not what you’re able to borrow today.
Just as necessary is an understanding of property values in your local market. Be clear on the price of property in the area you want to be, and be ready to take action.
First-home buyers need not feel pressured to rush into the market, but shouldn’t expect prices to fall much further. They’re going to see some good buying power over the next couple of years in Sydney and Melbourne, But if you’re waiting on the sidelines for a significant correction, it’s not likely to come back to that extent.
First-home buyers are generally quite cautious, but should avoid paralysis by analysis.
Caution can work for you, but you’’ve also got to be careful you don’t hold back for too long, and don’t end up having to pay more than if you moved in earlier days.
Selecting the right property
First-home buyers need to ensure the property they choose has the best prospects for growth.
It’s really important to get your first property selection correct. It’s going to help you take steps up the property ladder.
A good floor plan, natural light and outdoor space were key factors the home itself should have, while the suburb should have easy access to schools and transport.
If you’re going down the apartment path, it’s important to make sure you’re well located in term of access to amenities and public transport.
A car space is also critical, whether buyers need it or not, because it’s a feature that future buyers would look for and therefore affects resale value.
It’s important to buy a property that’s as attractive as possible to the buying public. If it’s got a finite number of buyers, prices aren’t going to go up as fast.
First-home buyers should be realistic, and shouldn’t expect their first purchase to be their dream home.
The biggest challenge is going to be ticking off all of your wishlist on your first property. Your first property doesn’t have to be your home for life. Buy something you can afford.
First-home buyers should consider how long they would live in the property, as upgrading frequently can come with significant costs.
Look at what your needs will be for the next five to seven years. If you can’t buy for that, there may be another strategy.
Experts agree in a downturn, the most desirable properties might be relatively insulated from further price falls. Quality assets stand the test of time, and they have an underlying demand. If you’re buying a quality asset, it might not be going back in value right now.
Owner-occupiers often paid an “emotional premium” for a property that ticks all the boxes, provided it’s a long-term play. You do need to be prepared to pay more than anyone else to buy a property, But the longer you hold the asset, the more that potential emotional premium is negated.
What not to do
With fewer properties at auction and less transparency in the sales process, buyers need to avoid paying more than a property is worth.
In recent years, people have paid far too much for their property and bought a property well beyond their means.
While a downturn might mean lower prices, it could also mean fewer high-quality properties are available, so buyers should resist bargains that turn out to be poor investments.
The risk in a down market is that you don’t have the same level of choice. You don’t have the discretionary vendors in the marketplace who don’t sell because they won’t get the best result.
It’s important that buyers don’t stretch their finances too far, as this creates a strain on household finances and may mean buyers need to pay lender’s mortgage insurance.
Keep saving. You’re better of getting a lower loan ratio and a smaller debt.
Buying your first home and don’t know where to start? Contact us on 9523 6511