Working out whether to jump onto the property ladder or continue renting can be a confusing decision. Especially when housing affordability is such a huge issue in Australia.
Luckily, the ACT annual budget which was handed down earlier this year has changed the game for new home buyers—and heartbeats are racing.
While the abolition of the First Home Owner’s Grant sounds like a blow for those looking to get into the market, it has been offset by the removal of stamp duty for low-mid income first home buyers. The previous scheme pushed FHB towards new properties, such as off-the-plan apartments, with reduced stamp duty for new or heavily renovated properties.
This is great if the ability to walk to work, have brunch at the downstairs coffee shop or stumble home from a night out was what you wanted in a property. But if size is more important than location and you need a backyard for your fur family, the new changes mean no stamp duty for existing properties also, opening a wealth of options in the suburbs. Many more first home buyers will qualify for concessions.
Changes won’t come into effect until July 1, 2019 but the announcement has tenants talking, and perhaps thinking of getting into the property market.
Have these changes made you think of buying a property of your own? We’ve put together our top tips on what to do when getting started on your buying journey.
Buying a house is a huge decision, one that you shouldn’t be making lightly. It’s not like buying a pair of jeans that look great in the shop and then changing your mind the next day—a house isn’t a purchase you can refund (even if you do keep the receipt). So, it’s important that you’re confident and happy with the property you buy. Before you even begin searching for a home of your own, there are questions you need to ask yourself:
Why are you buying?
Knowing the reason why you are purchasing a property will help you to decide what type of property to buy.
You may be buying a family home, with the intention of raising children and living in the property for the next fifteen years. In that case, you might look for a larger house close to schools and parks.
Are you buying a home to enter the property market? If so, you may decide an apartment with a good rental return is the best option. Once you’ve lived in the property for 12 months, you can rent it out, so keep that in mind.
Think of your intention for the property and base your search around this.
What do I really need in a home?
This answer is different for everybody. Knowing what you want in a home will help you to narrow the list down when you start looking at properties.
When buying a house, remember that there’s a difference between what you need and what you want. If you plan on starting a family down the track, you will probably need a home with space, but probably won’t need a swimming pool, as nice as that sounds.
Ask yourself, what are the must haves that you could really do without? Be very honest with yourself here—yes, an indoor sauna may be nice, but is it 100% necessary for your first home?
Check out some real-life examples in our Buying Blind: what would you sacrifice story.
Am I prepared to save?
If you are wanting to own a home, you will need to save some money. Yes, paying rent and saving can be hard, but it’s important to have a plan and goal in place. Speak to a broker or lender—their services are FREE and can help you understand how much you need to save and what to do in order to get started—did we mention they’re free! We recommend Clarity Financial Group. They have been helping Canberrans meet their property goals for years.
You actually don’t need to save as much as your think. Get the facts from our article Truth Time: how much do you really need upfront for your first home?
Before you begin seriously looking at properties, speak to a broker or lender about pre-approval. Pre-approval is an indication of how much you will be able to borrow when purchasing a property. Your credit rating, financial situation and assets are all considered to give you a realistic understanding of how much you could borrow.
Having pre-approval will also show sellers that you’re serious about buying and that you’re confident you can afford the property. This could be a big advantage if you find yourself negotiating with a seller as they know you’re able to buy.
If you decide to make an offer on a property, having pre-approval will put you in a position to move quickly.
Get familiar with the buying process
There’s more to buying a home than handing over the money and moving in. From applications to settlement, it’s important to understand what’s going on.
Speak to family and friends about their experience or ask an agent for advice. An agent will be able to tell you about the buying process and what to expect. They can also help you search for properties and talk you through contracts.
A good agent will be a key ally throughout your buying journey. Don’t be afraid to ask questions if you don’t fully understand.
Throughout your buying journey, you’ll hear a lot of terms and phrases you may not understand. We’ve put together a handy guide to property lingo to help you.
The more understanding you have of the buying process, the more comfortable and confident you will feel.
Research the market
We don’t mean go to the library and read as many text books as you can or apply to university for a degree. But buying a house does require some research and study time—the more you know the better equipped you will be to make a decision.
Speak to an agent who is prominent in the area you’re looking at. They will be able to give you an insight into how the market is performing. They could tell you the median house price, the types of properties for sale and how much competition to expect.
Let the agent know what you are looking for, so they can notify you if anything comes on to the market that might suit your needs.
Visit open homes (just like you did when you found your rental) and auctions to learn what’s available in the area and what people are asking for as their sale price. This will give you a rough understanding on what to expect to pay for certain property types. You can also see this on Allhomes.com.au. Click on the ‘research’ tab and type in your desired location.
Buying your first property is one of the most exciting moments in your life. If you feel that you want to get into the property market and buy a place of your own, these changes may get you one step closer. Enjoy the journey!