Property investment is generally regarded as long term. However, it can be tricky to purchase a first home that you won’t outgrow immediately.
The not-so-easy task of saving for a deposit, the absence of equity in their current home and borrowing abilities constrained by early-career salaries indicate that future-thinking first-home buyers have to weigh what they want in a home at present with what they’ll require in the future.
Looking towards the future
A majority of first-home buyers know that their purchase is just a means and purchase according to their present situation. People buying their first home would like to choose something close to their work and look for something newer that looks easy to manage. But it can be detrimental to focus too much on your present lifestyle. For example, young couples purchase in inner-city suburbs to be close to restaurants, cafes and pubs, then they start a family and immediately their location is redundant. It can be a big mistake to purchase a home that isn’t going to meet your needs for long. You’d be wasting your transaction costs if you have to sell and relocate to another home within a few years.
First-home buyers’ thought processes are often influenced by market conditions. If the market is really strong, buyers will try to enter straight away and probably have less thoughts for the years ahead. However, they tend to plan more if the market is weaker.
Affordability issues often force inner-city first-home buyers to purchase smaller apartments, putting a limit to how long a property will continue to be suitable as the family grows.
But by expanding the search grid, new possibilities can open it. If your lifestyle allows you to live in other suburbs, you should open yourself up to the possibilities of what you can purchase.
Here is what we recommend: First-home buyers planning to expand their family should prioritise what they’ll require in the home itself over their present lifestyle. A family-sized property can be a more profitable long-term investment than an apartment.
Planning for improvements
As an agent I often advise first-home buyers to consider how the home will help attain future objectives and think about ways you can boost the value of the property through cosmetic upgrades or extensions to woo potential future buyers. You’re not going to be living in the property forever. It is not where you’re going to raise teenagers in, but it might be where you’re living when your first baby arrives.
You need to make sure the value of the equity you’re adding to the home is safeguarded and does not vanish in a weak market.
The present low interest rate could let first-home buyers afford a more permanent home. It’s the perfect time to look for something that is bigger than you thought you could buy. Anyone who has had to live in a cramped space understands the importance of having a bigger space.
As long as you don’t overextend yourself, now is that ideal time to enter the market where you’ll be able to get more features/amenities that you want in your home. Buying for the future needs a thorough deliberation, and not doing your research can prevent you from buying a long-term home. Ensure that you’ve done research on the location you’re purchasing in. If you’re aiming for long-term, you want to avoid a home you’ll outgrow immediately.
Determine if this is a neighbourhood you can imagine yourself living in for more than five years.