3 tips for first home buyers

In December 2023 alone, the Australian Bureau of Statistics recorded a 12.9 per cent rise (9,491 new home loans) in new loan commitments (seasonally adjusted) for owner-occupier first home buyers. This compares to December 2022, where there were around a thousand fewer new home loans (8,405 new home loans).

REBAA president Melinda Jennison said that the spike in first home buyer activity during December 2023 could be attributed to the peak of the interest rate cycle having passed.

“Many first-time buyers were waiting in the wings for a clearer interest rate picture to emerge, which was the case at the end of last year,” Ms Jennison said.

Noting that home ownership is “one of the most simple ways to secure your financial future”, Ms Jennison stressed that some of the government schemes (such as Help to Buy and First Home Owner Grant) can look attractive, but buyers must ensure they are “thoroughly understood to ensure the properties for which these schemes apply align with longer-term goals”.

Being able to make the right decisions will reward the first home buyer with a longstanding portfolio and presence in the property market.

Here are Ms Jennison’s three tips to guide you when buying your first home:

1. Have a strategy

Ms Jennison advises that the first property purchase should be well thought out. It must be done right.

Consequently, she says that “by purchasing strategically, first home buyers can fast-track their wealth-building journeys”.

It doesn’t matter if buyers choose to go through professionals or do extensive amounts of research and buy themselves, Ms Jennison emphasised the end game is to seek out “the best dwelling you can afford to purchase with the most upside potential”.

This will enable you to upgrade sooner by being able to have capital gains or leverage from it to start your own property investment portfolio.

2. Be prepared to settle for what you can get

It is important to do what is necessary to buy, which Ms Jennison noted includes being prepared to compromise on locations or dwelling sizes.

“Your first property is a stepping stone to your next one and probably won’t have all the bells and whistles that you currently desire.”

It’s about securing a “foothold in the market so that you can build equity and upgrade or renovate in the future,” she stated.

3. Seek out professionals early

The most successful first-time buyers are the ones who get organised early, Ms Jennison said.

She advised that the lack of experience and knowledge attached to buying a first home can be counteracted by having a team of professionals behind it.

This means gathering any necessary professionals, such as lawyers for understanding a legal contract and a conveyancer or solicitor to “guide you early on, as well as provide contract reviews, before submitting an offer is non-negotiable”.

In addition, mortgage brokers can also be helpful to ensure you are “only looking at properties within your price range”, rather than simply completing a borrowing power calculator online.

“First home buyers can sometimes feel a little at sea because of their inexperience, but they can even the score by having a team of professionals behind them,” Ms Jennison said.