The year of the first home buyer, but there are warnings
First home buyers will soon have the benefit of a deposit scheme to help them in the property market, but it is also a case of buyer beware.
The year 2020 may very well be the year of the first home buyer.
With the introduction of the government’s First Home Loan Deposit Scheme (FHLDS), which starts next month, and record low interest rates, there may be no better time for those preparing to start their climb on the property ladder, to begin.
There is also the good news that housing affordability across the nation has improved, with the Real Estate Institute of Australia releasing figures showing the highest percentage of first home buyers in eight years.
For South Australian real estate agents Ouwens Casserly, finding out that housing affordability in their state has improved is good news, especially as the state now contributes 5.2 per cent of all first home buyers.
“At Ouwens Casserly, we meet around 1,000 buyers each weekend at open inspections across our 5 offices and 50 real estate agents,” said managing director Alex Ouwens.
“We have definitely seen a trend towards more first home buyers making offers and purchasing property in the last quarter.
“We have also noticed there is an increase in first home buyers looking to buy investment properties instead of buying a house to live in themselves.
“Some would prefer to stay with mum and dad or rent in their preferred suburb and buy an investment property in an alpha suburb. ‘Rentvesting’ is what we call it!”
Property Strategist, Debra Beck-Mewing of Crave Property said, while the FHLDS will help, first home buyers will need more than money to ensure they set themselves on a successful financial path.
“We see many first time buyers who are given loan pre-approval but then burn months and months trying to make a decision,” said Ms Beck-Mewing.
“It’s these buyers who then fall prey to the marketeers and spruikers who push them into problem properties.”
With property prices predicted to spring upwards in some markets by more than 10 per cent in the next few months, first home buyers will be under pressure to make good decisions quickly.
Ms Beck-Mewing said most buyers will have some knowledge of one aspect of the buying process, but to be successful buyers need to be across all aspects.
These are her key tips:
- It really isn’t all about ‘location’- the most important issue is to ensure your strategy is best for you. Under no circumstances should you be trying to chase ‘hot’ suburbs as this is a recipe for trouble.
- If you’re receiving ‘advice’ find out how the ‘advisor’ is being paid. If you’re not paying them, then the advice they’re giving you is biased. This is particularly true if the advisor is presenting you with a property. They won’t be showing you the full range, only properties where they’re receiving a commission.
- Never pay service fees in full upfront. It’s fine to pay an initial component but never the full fee. This should be a rule for life when using services as the service provider will have limited incentive to complete the job well if you have paid the fee in full.
- If you’re paying for a service, ensure you have a written money back guarantee so if anything goes wrong you have an opportunity to withdraw from the agreement and get a refund.
- The worst type of advisor will charge you upfront and also take commissions. Of course, this is illegal however these bad practices are very prevalent in the current market. Protect yourself by validating any information you’re given. For example check the background of the advisor and any developers connected to the property.
- Do not rely on ‘research’ that accompanies a property. Check the information with people and organisations not connected to the sale. This is particularly important when considering new, off-the-plan, or house and land purchases.
- Ensure you are clear on current prices in your target suburbs – look at similar properties on any of the major property portals for a quick sense check.
- Always conduct strata reports and building inspections, and gather as much information as you can before making an offer – use a checklist to increase your efficiency.
- Anyone talking to you about property should have a license to do so. Check each State/Territory Office of Fair Trading to ensure the license is current.
“Of course, buying a property has many nuances, twists and surprises but if they get it right, buyers can set themselves up for life. This is only achievable if buyers are prepared and organised,” said Ms Beck-Mewing.
Source: The Real Estate Conversation 5th December 2019 https://www.therealestateconversation.com.au/news/2019/12/05/the-year-the-first-home-buyer-there-are-warnings/1575503401