What is the right time to buy the first home?

Buying your first home is one of the biggest investments you will make in your lifetime. It is a marker event in your life.

Let us address first some of the questions and bursting the myths that may be holding you back from going ahead to buy your first home.

Can you afford it?

Let’s assume at the moment you staying on rent for example in Blacktown, the heart of western Sydney. Moreover, it is where most of the new migrants end up initially at least and they are the prospective first home buyers too.

If you scroll through one of the property portals like www.realestate.com.au or www.domain.com.au it is easy to notice that the average rent of a two bedroom unit in Blacktown NSW is around 350 to 400 per week, that comes around 1400 to 1715 per month. Accordingly, you can check the average price of a similar property that is a two-bedroom unit in the same area and finds that it comes to 350,000 to 420,000.

Similarly, you can check the weekly, fortnightly or monthly mortgage repayment for any of the online mortgage calculator available in plenty and for free. Here is a link to the one provided by CBA (https://www.commbank.com.au/digital/home-buying/calculator/home-loan-repayments). The mortgage repayment on a loan of 350,000 needed to buy a similar property you are currently renting, at the interest rate of 3.5% comes down to 1571.00 per month. Surprisingly it is mortgage repayment is less than the rent you are paying.

Therefore there is no reason why you can not afford and why you should not buy.

The answer is off course yes, you can afford it. The only thing you have to manage is the deposit.

The cost of delaying to buy the first home

Suppose you delay it for one year. That means you are wasting 1715 x 12 = 20580 per year on rent. By the time the property prices will jump another 2-3%.

Are the property prices going to fall?

Don’t get carried away by the newspaper headlines, as these are very misleading. The property prices have dropped and will drop only in the CBD areas and of prime location prestige properties that are highly overpriced and artificially inflated.

These properties are targeted at domestic speculators or overseas buyers with surplus cash and deep pockets.

There is a nominal change in the outer suburban family houses and there is no likelihood of price drop in prices in the near future. These are homes that should be of interest to genuine buyers and first home buyers.

That prices of such properties are going to stay and keep moving up gradually at its own pace with the price index. In the long run, these properties are going to create equity.

What is the right home to buy?

Freestanding torrent tiles are going to get you the desired equity in the long run as against the apartments or unit blocks. The units are easy to rent out and can get a little bit more rent as these are located closer to the train stations but you end up paying strata fees over which you don’t have a control and strata fees keep increasing. The strata fees in the newer blocks with more facilities are excessive and sometimes as much as the rent of the unit.

As the first home buyers are buying not to rent out but for owner occupation and build equity they should go far torrent titles.

Where to buy the first home?

You can buy anywhere wherever you can afford it easily without stretching too much. There is no significant difference in the price of a unit closure to the station and a house a little bit away from it. You should go to the house.

In case your income does not get you home in the area where you want to live think of buying interstate, rent it out and rent in wherever you are working at the moment. You can plenty of houses in Brisbane for a price ranging from 300,000 to 350,000.

Conclusion

The right time to buy your first home in NOW