With a base of ambition, a sprinkling of confidence, dash of fiscal maturity and thick layer of realistic expectations, first-time buyers can be well on their way to cooking up a successful foray into the property market.
When I’m going through an especially busy period in either my work or social lives, I tend to become incredibly lazy at home. The ironing doesn’t get done and vacuuming goes from a twice weekly to a twice-monthly chore.
Worst of all, I ditch the Sunday afternoon grocery shop and instead rely on take-out or frozen meals. This pattern extends for weeks at a time. As a result, there are occasions when I’m left in the lurch, such as post-midnight cravings after a night out when the pizza place is closed and my only option is to fend for myself.
A few strands of spaghetti into a pot of boiling water, doused in a combination of butter, tomato sauce and salt.
As any half-decent cook will know, a missing or substituted ingredient in a recipe can leave a dish wanting. It might come out looking alright, but without that tried and tested list of additions, it’ll probably taste pretty bland.
In my view, one of the most essential ingredients for first home buyer success is confidence. After all, if you’re not even willing to preheat the oven, what shot have you got at eating a decent meal?
Confidence across all sectors of property buyers has been fairly flat in recent years. Owner-occupiers looked to be getting a bit of their groove back part way through 2012. Investors followed, likely buoyed by a combination of upgraders’ activity and rising rental prices.
As summer came to a close this year, sentiment really heated up across the board. Index ratings rose sharply, signalling a possible turning of the corner. However it seems first home buyers remained far less convinced of the state of play.
Mix together that nervousness with a slashing of first home buyer grants in many states and tougher finance conditions imposed by banks, and you’ve got yourself a fairly disappointing dish. In fact, by the end of the first quarter of 2013, finance levels for these buyers had hit their lowest levels in a couple of years.
National mortgage brokerage Loan Market reports some positive news in the first-timer arena. They’ve been the most active enquirers in the company’s home finance market in the months of March and April.
Over those two months, first home buyers represented 53 per cent of all Loan Market’s enquiries for a home loan. While it doesn’t necessarily mean those folks are ready to purchase right now, it’s an important first step and shows a willingness that has been sorely lacking for a while now.
Of course, it’s early days and first-time buyers have traditionally been a bit less predictable than other buyers. They spook easily, I guess. But with most markets on their way to recovery, interest rates low, rents continuing to rise and the economy remaining relatively stable, perhaps they’ve finally decided that the time is right.
If that much-needed confidence is back in supply in the pantry, then we’ll be cooking with gas. But there are some other ingredients first home buyers need to stock up on to have the best chance of buying success.
This shopping list includes:
- Several cups of knowledge of the real estate market – not just at a city level, but suburb by suburb. Once a would-be first-timer has narrowed down their focus to a particular area, they should become as acquainted with it as humanly possible;
- A healthy dose of personal reflection, with an emphasis on personal finances. What can you reasonably afford in terms of mortgage repayments, maintenance, council rates and body corporate (if you’re buying a strata-titled property)? What about unexpected interest rate increases or major repair bills? What if you want to travel next year or start a family in five years’ time? Anticipate every kitchen mishap or adventure and model your fiscal position accordingly;
- An even mix of finance and ownership structure, heaped on by a properly qualified expert who’s willing to explain the ins and outs. How will the mortgage be structured? What features will it have? And what about the structure the asset will be in?
- A tablespoon of forethought, even if you’re buying a home that right now you imagine you’ll live in for some time. Think long-term – specifically, what this property could represent if your priorities change.
Most importantly, if you’re not overly confident in the kitchen then it’s always wise to seek the advice of a seasoned chef. They’ll be able to guide you through the preparation, baking and seasoning of the end product. Whether it’s a lawyer, accountant, finance adviser or buyers’ agent, the cost involved will be well worth it when you’re tucking in to that perfectly prepared dish.
Shannon Molloy is the deputy editor of Australian Property Investor magazine, www.apimagazine.com.au