Key takeaways
Don't focus on median prices in isolation. They can be distorted by the mix of properties sold and don’t necessarily reflect changes in property values.
Focus on recent comparable sales. Sold prices tell you what buyers are actually paying, while asking prices are simply the vendor’s expectations.
Look beyond presentation. Cosmetic problems can create opportunities to buy well, particularly when they are inexpensive and easy to fix.
Buy within your financial comfort zone. Allow for interest rate changes, ongoing ownership costs and unexpected expenses rather than stretching your borrowing capacity.
Get the right advice and do your due diligence. Multiple inspections, building and pest reports, and an experienced buyer’s agent can help you avoid costly mistakes and negotiate more effectively.
Buying your first home is a significant milestone that requires careful planning and preparation.
For most people, it's the biggest financial decision they'll ever make.
With so much at stake, it's essential to have a good understanding of the property market and the home-buying process.
Here are 9 things every first home buyer needs to know before taking the plunge:
1. Don’t focus on the “median price”
With the myriad property statistics available these days, one that sometimes is given too much attention is the median price of a city or even a suburb.
Yet with all the reports about medium price changes, many home buyers believe that the median price is the average price of all properties sold in the area, yet the median price is not an ‘average,' and isn't necessarily even indicative of prices in an area.
However, the median price is the middle price in the set of available sales figures.
This means that an equal number sold below that price as did above, suggesting that cheaper properties have also sold.
Of course, while changes in the median price can suggest changes in value, it often reflects a change in the composition of sales.
For example, if an expensive new prestige development is launched, the sales prices are likely to increase.
This doesn’t mean that nearby older units have gone up in value.
Note: On the other hand, currently, fewer properties are selling at the higher end of the market, and more properties are selling in the lower price brackets, and this alone pulls down the median price.
Therefore, first-home buyers should consider multiple factors while analysing what’s happening in the local housing market.
2. Looking at sold prices is more useful than looking at ‘for sale’ prices
While browsing for properties, it's important to look at sold prices instead of just "for sale" asking prices.
Sold prices are more effective because they show what properties have actually sold for, especially when the sale is recent, and the property has similar attributes and a comparable location.
What a property is listed as is not necessarily what the vendor will end up achieving - some properties sell for more and others sell for less than their listed price.
Therefore, buyers should conduct thorough research and consider sold prices along with listing prices.
3. Don’t judge a book by its cover
It's essential to look past your initial impressions when considering a property - the house's appearance, such as an outdated kitchen or a weird colour scheme, might turn you off from purchasing it.
However, the discount you might achieve because of its presentation could easily outweigh the cost of rectifying the bad style choices.
If the problem is fixable and cheap, then you may be able to get the home of your dreams for a discount.
In other words, it's worth considering a property's potential and factoring in renovation costs.
4. Inspect more than once before you make an offer
First impressions can be deceiving, so inspect a property multiple times before making an offer.
Visiting the property at different times of the day can help you understand the neighbourhood better.
Buyers should check the property in the evening and during peak hours to assess the noise levels and traffic.
Inspecting the property thoroughly can help you make an informed decision while purchasing.
And don’t forget to make any offer subject to a “building and pest inspection” to ensure there are no hidden surprises.
5. There’s always another property around the corner
It's natural to become emotionally attached to a property and stretch your finances to acquire it.
However, remember that there will be other opportunities to buy a home.
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Stretching yourself financially beyond your limit could cause future financial strain.
Therefore, buyers must prioritise purchasing with their own financial ability in mind.
At the same time, if your gut feeling tells you that the property isn’t right, don’t ignore your instincts - you need to be comfortable with the purchase you make in the long run.
6. Remember that interest rates move both up and down
If you've been in the market for some time, you'd know that interest rates have moved up from historic lows to what some people consider reasonably high levels.
However, rates are around the average level one would expect to have paid over the last decade or two.
So it’s important to understand how a change in rate affects your loan, particularly if you’re opting for a variable rate, and to know what you can afford.
It's also important to have a contingency plan in place to cover you in the event of job loss or other financial setbacks.
This may include taking out insurance or building a financial buffer into your loan-to-value ratio.
By being prepared for the unexpected, you'll be able to weather any financial storms that come your way.
7. Don't forget that the costs don't end when you've bought
Buying a property is a significant financial commitment, and it's important to remember that the costs don't end once the sale is complete.
There are a range of ongoing expenses associated with owning a property, including council rates, strata levies (if applicable), insurance, and maintenance costs.
Before buying a property, factor in all these costs and make sure you can afford them on top of your mortgage repayments.
If you're upgrading from a rental property, your bills will likely be higher, and you may need to purchase additional furniture or make other changes to the property.
Budget carefully and make sure you can cover all these expenses without stretching yourself too thin.
8. The property market moves in cycles
Don’t believe anyone who tells you property prices always go up.
While property can be a sound investment over the long term, there are no guarantees, and you should be prepared for the possibility of price drops.
This means being realistic about the potential for future growth in the area you're looking to buy in and ensuring you're comfortable with the property's long-term prospects.
9. The homebuyers’ secret weapon – having a buyer’s agent on your side
Many homebuyers feel the property buying process is stacked in favour of sellers because that’s who the agents work for.
And that’s why more and more homebuyers are turning to buyer's agents for help.
Choosing a good buyer's agent helps level the playing field, and at Metropole Home Buyers , we’ve been awarded multiple awards as leading Buyers’ Agents and property strategists.
Having an experienced buyer’s agent on your side is a game-changer - it helps to level the playing field during your property buying experience and ensure you get the best outcome for you.
Here is how the team at Metropole Home Buyers can help you:
- We have no properties for sale, but access to every property on the market.
- We represent you and not the vendor.
- Our buyer's agents live and breathe your local market, and this opens doors faster for you.
- Our research and perspective save you money.
- Air Experience saves you time.
- You can leverage your local expertise.
- We negotiate on your behalf and level the playing field.
- Our skills reduce your stress.
Why not get a professional home buyer on your side?
Whether it's your first home or your next home, our experts are ready to talk strategy with you today.
With over 40 years of experience in the property market, Metropole are Australia’s most trusted buyer’s agents.
Our award-winning team is here to make finding your dream home easier, so why not book an obligation-free meeting with us today?
Click here now and organise a complimentary consultation to discuss your options.
