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Essentials for first home buyers
First home buyers have the opportunity to build a strong foundation for their future by planning effectively. Whilst making your first purchase may be daunting, having a comprehensive Property Plan for life's greatest asset, property, can make the process easier and empower first home buyers to proceed with confidence.
We recently came across an article by Matt Wade in the Sydney Morning Herald regarding a household-level survey, that a team of economists from Sydney University and RMIT University recently conducted between 2001 and 2010. Their study found that those who received $5,000 or more from mum and dad were much more likely to own a home than others. So broadly speaking, the study found that it is harder to purchase your first home if your parents had not financially assisted. Whilst an interesting read, I'm not sure that we needed a study to inform us of this. Click here to read the article.
We thought further on the article and while we recognise the social importance of a potential gap, it's also important to understand, that just because someone has made the leap into their first home, doesn't mean this will equate to more wealth. Particularly if a poor decision was made with the first purchase. First home buyers can make critical mistakes. Asset selection and making better property decisions can maximise prosperity regardless of if mum and dad assisted or not. Another approach for the study could have been attempting to find a measurement of the socio economical position of the parents who helped compared to those who have not helped their kids. Than draw some possible conclusions based on that information. We agree that we should be trying create more affordable housing. We also need to understand that the gap is likely to get wider based on the cites or towns we choose purchase in, and between the different locations within those cities and towns. For example, the gap will absolutely continue to widen between inner established suburban Sydney and outer suburban Hobart significantly. The main gap between haves and have nots in regards to property is driven by our own choices. We can control the type of dwelling and location we select.
The choices and decisions we make in my opinion is a much bigger part of the picture.
We need to have fewer homogeneous one dimensional property conversations, and more targeted planning to help ensure the great Australian dream remains an option for those willing to work hard and who have discipline with their money management.
First time buyers also need to understand that property is our largest asset. Your first and possibly second properties will not be your ideal home in your ideal location. We all need to make compromises in life. Where we can afford to live is one of the most common decisions where compromises are inevitable - even when you can afford a 'nice home'. It might not be what Gen-Y's or even new millennials want to hear, but there is still a viable path forward to strong property investment with the right strategy and compromises.
A little tip - aim for your first, and possibly your second property to be a stepping stone purchase. Don't focus on your ideal home right away, focus on the location you want to be in first.
Another tip - from a financial return on your home value perspective; compromising on the dwelling rather than the location will often hold you in better stead for the next home purchase.
Buying your first home has never been easy - this includes the generations that came before me. Ask you parents, aunties, uncles and grandparents. I doubt that will ever change. Get educated and develop your own property plan for accumulating life's greatest asset. Make that your new year's resolution! Happy New Year.
If you are a first home buyer or know someone who is, get them to click here or call our head office on (03) 9819 4088.