This is the question everyone asks themselves before they decide to buy their property for the first time. Buying your first property is probably the biggest and most expensive decision you will make so getting the timing right is very important.
Most people I know tell me they are waiting for the market to slow down, prices are too high or that the bubble is going to burst, or maybe interest rates are too high, and so on. So they wait, and wait and wait. When the market does slow down they wait again thinking the prices will go down even further. When the bank raises interest rates they wait for them to come down and when they do eventually come down they don’t like what’s available on the market as often not many good properties are sold during the buyer’s market, so they wait again.
In today’s highly unpredictable economy & market, even so-called experts are often getting wrong where the market is heading. As a first home buyer, if you are targeting the right timing to purchase when the house price is at the bottom, it will be very hard to predict or that time may even never come hence possibly only causing further delay in getting into the market.
On the other hand, with rising building costs due to the global supply chain issue caused by Covid-19, border re-opening with more population projected coming in Australia from overseas, the rental market seems to be under high pressure with less supply and more demand will give enough reasons for the first home buyer to purchase their home once they are financially ready.
If you are waiting for the market correction due to the coming rate hikes, this could also mean your borrowing capacity could be reduced when calculated at a higher interest rate. The smaller borrowed amount may not always mean the smaller repayment when the higher interest rate is applied.
Another important point to factor in is there is always a market within the market. With increased concern over housing affordability, there is a number of government initiatives/schemes available for the first home buyers to help them to enter the market earlier. Often there are limited spaces available for government schemes and it is quickly taken up each year for those who are ready.
So when is the right time to buy your first home? It's when it becomes a priority and it’s all you think about. When you get to that stage it's time to ask yourself these questions:
How much savings do I need for a deposit?
What is my borrowing capacity?
Do I earn enough money to be able to make mortgage repayments?
How much is mortgage interest more/less expensive compared to the current rent expense?
What sacrifices will I have to make to be able to afford a home?
Once you have answers to these questions your dream becomes much clearer and the journey towards becoming a homeowner and not paying off someone else’s mortgage becomes exciting; and attainable.
A home loan generally has a lifespan of 30 years and no one can predict what the market will do in that time. There will be ups and downs, but you can make it worthwhile by having a home loan that's structured for optimal performance and playing the long game.
I always tell my customers, that the right time to buy is when you are ready and excited about the journey. When it comes to real estate, it is not about the timing but about the time in the market after all.
If you want to find out your financial positions as well as available government schemes/benefits for first home buyers, please don’t hesitate to reach out to Jenice Lee.
Jenice Lee at Finance Star is MFAA approved finance broker and is not your average mortgage broker.
Contact us if you want to find out more about how we can help with your finance options.
FINANCE STAR Credit Representative Number 529071 is authorized under Australian Credit Licence Number 389328.
This article provides general information only and has been prepared without taking into account your objectives, financial situation, or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax, or financial advice and you should always seek professional advice in relation to your individual circumstances.
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