First time buyers must be realistic

Successful first time buyers are compromising on location in order to purchase property, according to mortgage broker Mortgage Choice.

The company’s latest survey shows almost 40 per cent of first home buyers who purchased within the last two years struggled to buy property in their preferred location.

According to the survey, 37 per cent of respondents said they couldn’t buy exactly where they wanted to – up from 34.7 per cent in 2015.

More than 80 per cent of these buyers said a lack of affordability was the reason they couldn’t buy in their desired suburb.

John Flavell, CEO of Mortgage Choice says although disappointing for the first timers, the results aren’t surprising.

“Generally speaking, first home buyers will want to buy in an area that is close to family, friends and work,” he says.

“However, in most cases, these are generally the more expensive areas.”

Flavell says a lot of these buyers want to be, “close to the action and buy property as close to their capital city as possible,” however extraordinary price growth in major capitals has dashed hopes.

“In Sydney and Melbourne, property prices climbed 11.3 per cent and 11.5 per cent respectively over the 12 months to July 2016.

“As a result, these cities boast median dwelling prices above $500,000.

“Understandably, it can be very difficult for many first home buyers to save the deposit needed to buy a home worth at least $500,000.”

Flavell’s advice for first time buyers is to compromise on their expectations and get into the market as soon as possible.

“Property can be a great investment and, once in the market, home owners might find it easier to purchase a property in their desired area,” he said.

“First home buyers need to think sensibly when buying property, and understand that while they cannot afford their dream home today, that doesn’t mean they won’t be able to afford it in the future.”

According to Flavell, low interest rates should encourage participation, although a strict approach to budgeting and lifestyle will help get a deposit together sooner.

 

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