For many young Australians, the dream of owning their first home is both exciting and daunting. With the Property market constantly changing, with property prices seemingly getting further and further out of reach, with an unfamiliar field of players and rules (think real estate agents, mortgage brokers, conveyancers, affordability checks, credit checks) it is easy to see why many find it hard to know where to start.

A good place to start is talking to someone who has done a home purchase before, perhaps even multiple times. This can be a family member or a friend or a conveyancer or mortgage broker. (I am leaving a real estate agent out of this list. Because the real estate industry can be very sales driven and RE offices can have a high turnover of staff. That means you could be talking to a new inexperienced agent who is focussed on making a sale. So unless you have a family member as a real estate agent who has your best interest at heart, better not to ask….)

It is crucial to approach the First Home Buyer journey with an open mind to advice, a lot of patience and a willingness to accept that compromises (think price, location, size, features) might have to be made along the way. Start with a well defined goal (house or townhouse or apartment, 1,2,3 or 4 bedrooms, North facing, backyard, car spaces, close to transport or work or schools or entertainment, new or established, ….), write down your non-negotiables as well as your “nice to haves but not essentials”. Here is a comprehensive list of features to consider.

In this post, I aim to deep dive into the key considerations for first home buyers just starting their journey. It is applicable to young adults and couples aged in their late 20’s to mid / late 30’s, who earn over $120,000 annually ($180,000 combined) and have at least $50,000 in savings or parents who can be guarantors. Let’s explore the journey, focusing on knowing your “why”, “where”, and “when”.

1. Exploring your why

Before logging on to realestate.com, take a moment to reflect on your motivations for buying your first home. Are you seeking stability of where you live, freedom from a landlord, a foot in the door of the property market, a place to call your own or are you following the path taken (and perhaps strongly encouraged…) by your parents? Understanding your why will guide your decisions throughout the process / on your journey.

2. Stability of residence

For many first home buyers, the allure of stability is at the heart of their motivation. Tired of the uncertainty that comes with renting, they desire for a sense of permanence and security that only homeownership can provide. By planting roots and buying their own home, they picture a future where they can paint the walls, put pictures up where they want, tend to a garden, and create cherished memories without the fear of eviction or rental hikes.

3. Freedom from a landlord

This is similar to the above. The need for independence drives many First Home Buyers to ditch the rental option. To be no longer tied to the whims of a landlord, they set out towards autonomy and control over their living space. From doing minor renovations to major overhauls, owning a home empowers them to customise and personalise their surroundings according to their preferences, building a sense of pride and ownership.

4. A foot in the door of the property market

For young adults eager to make their mark in the world of real estate, purchasing a first home can be a pivotal milestone. It represents more than just a roof over your head; it is a strategic investment in your future. By entering the property market at an early age, you position yourself to benefit from capital growth, laying the foundation for future investment plans.

My own experience is that a person buying a home in Sydney before they turn 30 add’s $5m to their wealth by the time they retire.

5. A place to call “home”

More than just a house, owning your first home is about having a place you can call home. It’s where you feel safe, comfortable, able to relax and not be bothered by the world. Free to be yourself. From family gatherings to lazy weekends, it’s where memories are made and cherished for years to come.

6. Following in the footsteps of parents

Maybe for you, the desire to own a home is ingrained from an early age, passed down through generations as a necessary step and a symbol of success and stability. For you, the decision to purchase your First Home is a natural progression, inspired by the example set by their parents. By following in their footsteps, you honour a legacy of hard work, perseverance, and the pursuit of the Australian dream of homeownership.

7. Financial reasons

Sometimes financial reasons play a significant role in motivating individuals to purchase their first home. Firstly, owning a home can provide a sense of financial security by offering a stable asset that typically appreciates in value over time. Additionally, investing in property allows a buyer to build equity, which can serve as a valuable resource for future endeavours such as further property investments or retirement planning. Moreover, home ownership (investment) can offer tax benefits, including deductions for mortgage interest and other property expenses, thereby reducing overall tax liability.

Finally, by owning rather than renting, you will eventually save money, as mortgage payments usually stay the same whilst rents will continue to increase. A mortgage also provides the opportunity to pay off extra and thereby own the property outright sooner. A way to speed up this process is getting a room mate.

Thank you for reading this article. We are posting soon the continuation of this post “First Home Buyer Guide: Know Your Where”. Stay tuned.

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For questions, please feel free to send us a message. Email us at erik@micah.com.au