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Property Alert: First Home Buyer

Property Alert: First Home Buyer: April 04, 2015


I continue to be amazed at how the property market continues its audacious and unrelenting climb to air thinning heights. How much longer can a piece of earth and bricks and mortar or wood continue to hold the first home buyer hostage?

My research tells me that the first home buyer continues to feel left out in the cold. Deposits are getting harder to save and expectations are continuously adjusted regarding buying location.

 More and more first time buyers are opting to buy investment properties rather than the first residential move in. Not a bad strategy. In fact, I did it myself 30 years ago! From their perspective, they can still live at home with their parents or in a share house where bills are split and the rent from the investment property either takes care of the mortgage payments or goes a long way to this end.

My question is why not look at doing this another way where they can move into their own place much faster? If they were to co-buy and move in with friend, family or business partner, then home ownership would be well and truly in their grasp and any long winded, torturously winding road into the housing market could be shortcut…dramatically.

Home co-ownership is a practical way of making the leap into the property market. It’s a gentle introduction into home ownership because sharing mortgage, bills and all associated household costs, means that owning a home becomes a much more sustainable proposition. The rude shock of the mortgage, followed by electricity bills, gas bills, rates etc etc etc is somewhat cushioned as a co-buyer. What this means in real terms is that the high failure rate of first home buyers to hang onto their purchase, will be dramatically mitigated. Nasties like mortgage stress will not enter into the equation because you now have a partner to shoulder expenses.

Take heart; the co-ownership arrangement need not be forever. Set a date, usually two years, then capitalize on the growth or equity yielded by your house. Sell it or borrow against it and buy another!

The combinations and possibilities are endless, it just takes some courage, a determined mindset and a co-buyers contract that sets out clearly terms, conditions and obligations, with the aim of protecting the parties involved in the transaction. A Word of warning. DO NOT venture down this path without a contract! If things go wrong, you want to be in a position where the way forward is clear. It’s known as contingency planning and having an exit strategy. This is a huge psychological buffer that will remove tension, worry and possible disaster. I recommend that a contract be taken out with whomever you choose to buy. You always make provision for things that could go wrong, that’s why we take out insurance. It just makes sense!

I came across these rather sobering snippets of information that are sure to induce some tears amongst homebuyers.

Point Cook a magnet for first home buyers
The latest PRDNationwide figures show that the median price for a house in the popular western suburb of Melbourne rose from $336,750 in 2004 to $470,000 last year.

New home buyers paying more for less: UDIA
The median size for a new lot nationally fell by 3.6% over 2014 while the average price for a new lot in Australia’s five largest capitals rose by 4.2%, according to the latest UDIA State of the Land Report.

First home buyers turning to personal debt to fund deposits: Genworth
Only one quarter of today's first home buyers surveyed by Genworth have deposits of more than 20%, while 33% of current mortgagors had a 20%
or higher deposit when they bought their first home.

Please consider joining my MeetUp group Melbourne Aspiring Home Owners Group

It is designed to help you get into your house sooner rather than later!
Click the link and JOIN!



Dianne Ferrara