First Home Buyers Biggest Fears

In this weeks How's The Market | Edition 17

• First Home Buyers Biggest Fears
• Super Saturday Results Are In
• How Nice Are Your Cornices?

Need to know - What Are The Main Things First Home Buyers Struggle With?

Purchasing your first home is a massive achievement and something that shouldn’t be taken lightly. For many this means they are either moving out of home, no longer paying rent and they are also on the journey to begin building up equity in an asset.

As house prices have grown, the age of first home buyers has also progressively increased with recent studies showing that the average age of a first home buyer in Australia is 36 years old with the majority of buyers also being couples.

The reason this age is increasing is as house prices increase, so too does the required deposit with reports stating that first home buyers are taking anywhere between 2 and 10+ years to save their deposit.

As prices and ages of first home buyers are rising, so too are the stakes, meaning it’s even more important now to make sure that you get your first purchase right. In order to help make sure first home buyers are confident when it comes to making property decisions, we thought we should review what their biggest fears currently are.

According to a recent report by Finder, the biggest fear of first home buyers are:

1. Overpaying for their property
2. Not being able to meet ongoing repayments; and??
3. Not being able to afford their dream location

In reality, these 3 fears all come down to one thing.?

Planning.

If you’ve got a good mortgage broker, they should be able to sit with you and plan worst case scenarios regarding interest rates to see whether or not you will be able to cope with increased repayments. You want to test whether you will be able to survive if the interest rates went up or down by approx. 3%.

Once you know this, you will have a great idea of what you are comfortable spending up to. Then it’s as easy as scrolling through the sold section of REA to see what properties are actually selling for. You will then be able to figure out what your money buys you and what areas you can afford to buy in. Remember, your first property doesn’t need to be your forever home.

Once you have your area, it’s all about checking the comps (AKA comparable sales) to make sure you’re not overpaying. Try not to listen to the price guide as it’s never the best way to gauge market interest. Look through recent sales in the area and try to find properties that have sold in the last 3 to 6 months that are similar. That means the same property type - you can’t compare a townhouse to a house - then try to match bedrooms and bathrooms. Once you’ve found a couple of similar properties, compare land size and internal quality, don’t forget to take into consideration things like block orientation and natural light. If the properties are close by they should be a similar proximity to public transport, in the same school zones and have access to the same amenities.?

Once you’ve got a rough guide of what this property should be worth based on recent sales, call the agent. Ask what the interest is and feedback has been on the property. They will usually say there has been lots of interest even if there hasn’t, so ask how many people have requested the contracts and if there has been any building and pests. If competition is high, don’t be afraid to put a strong offer in, if competition is low, start lower and provide reasoning based on comparable sales.

In the know - What agents are saying

Last Saturday we saw what we call a Super Saturday in real estate. This is because it is the first Saturday of school holidays and all the agents plan their auctions for this date before most families go away for school holidays. As this week is also a half week, most agents are expecting very low activity.

As far as Super Saturday’s go, this was an okay one. According to SQM Research, we had the most scheduled auctions since the beginning of June with 1,084 over the weekend and we have also seen the highest auction clearance rate over the weekend of 51.9% since the beginning of April.?

Most agents are predicting very low numbers over the next two Saturdays with very few auctions taking place and most campaigns aiming for another large round of auctions in the beginning of October.

The Wow factor!?

As far as wow factors go, this property has most of them. Which is why it garners a nearly $20m price tag.

Though one intricate and captivating detail that you really don’t see in most properties is the level of detail which has gone into the cornices. Every room has a different, bold and obvious pattern that provides a unique character to each space. The living space in photos 11 through 13 show some of the most detailed craftsmanship I’ve seen in cornices.

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In the media

REA News - Survey: 43 per cent of buyers prepared to delay home purchase as property prices fall.

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Again, I often wonder how they make titles like this up.?

The article begins by stating that of the 1003 people interviewed, 8 out of 10 people would do everything they could to purchase at a lower price point. Firstly, when has this not been the case?

Secondly, the question they should be asking is, if there is consistent competition on all properties in your price point, how far would you be willing to stretch given the increasing interest rates.?

The article then goes on to state that 43% of respondents would be willing to wait until next year to purchase. This shows wishful thinking as I’m sure a large number of these respondents would be hoping to see prices fall over this time.?

Depending on the market that they are looking in, they may see this and be clever to delay a purchase, but if they are looking in any of the markets we are looking at, they will see that there are still large groups of buyers attending any good property and that most good properties are still receiving upwards of 3 offers which is still driving prices up.

My bet is that if this group of just over 430 people keep seeing prices rise in their area, they may get FOMO and jump in prior to Christmas to try to secure a property before they are priced out of the market creating another mini boom as we see each year at this time.

Final Thoughts

If you are getting ready to buy your first property you may feel the pressure of needing to move quickly. Whilst this may be the case, you should only move quickly once you have a great knowledge of the area and you are confident in the property you are going to purchase and you have done all of your due diligence. Really this all comes down to planning. I’ve always loved the saying Proper Preparation Prevents Poor Performance.

This weekend should be a fairly quiet weekend on the market in comparison to the last couple due to school holidays, though expect to see things start to pick back up as we head into October which is usually the busiest time of the year.

If you'd like some additional help with that, you can always book in a call to see how we can help. Just select a time in the link in comments that works best for you.?

If you made it this far, thank you and if you have any suggestions on what you would like covered in the future please email me at [email protected]

Happy Buying!?

Note: This is my opinion, please seek your own expert advice when making decisions.