First time home buyers – this is your time

For those of us who been through a few previous cycles of the property market, the current situation will feel familiar.

The seemingly unstoppable rise of house prices has paused…and then dipped. Auction rooms that were packed with bullish buyers are looking emptier these days. Properties are taking longer to sell. Agents are advising vendors to be realistic.

This is good news for one group in particular: first-time buyers.

If you are one – or you know one – here’s how to make the most of the situation.

Less competition, more time.

The last few years have been tough for those looking to get into their first home. With almost every property going to auction, buyers were pressured into outbidding each other in a live-action drama. Fun for vendors; terrible if you’re just trying to get a foothold on the first rung of the property ladder.

We lost count of the number of clients who blew thousands of dollars on reports and valuations for houses they didn’t buy. They had to do their due diligence, but then lost out when cashed-up buyers pushed the bid beyond their reach. 

In today’s slower market, first-timers have more breathing space. They can trawl the market, put together a conditional offer, and start negotiating on the home they want. They can undertake the costly due diligence if and when the vendor accepts.

There’s also the possibility that they might pay less this year than they would have last year.

We know one buyer who is now the proud owner of a home that cost him $300,000 less than he anticipated paying last year. The end of the runaway market creates winners as well as losers.

But what about interest rates?

Some people who haven’t been in the market long are shocked at the prospect of rates rising above 5%. Our advice is: Don’t panic.

No one knows exactly where rates will top out – and for most of us, it won’t matter much. As long as we’re not hugely overstretched, it’s simply a matter of budgeting carefully and living within incomes. We can carry on living in our homes, and wait for the interest rate peak to pass.

For first-time buyers, it’s a useful reality check. They can build a deposit and work out how much they can afford to repay. The banks will scrutinise their ability to repay at a higher rate. Once the loan is approved, they can start looking for a house to buy – and know the money is there.

The last bit is key. Always make sure you have a loan approved before you start putting in offers. If nothing else, you’ll know exactly what you can afford.

If you’re looking at getting into the market for the first time – or trading up because you’ve outgrown your home – we’re here to help. Come in for a chat before you need a mortgage, and we’ll give you our best advice. There’s no cost.