How will you buy your first home?
No matter where you're coming from around the world, or where you've been in the past, buying your first home is a major undertaking.
Short of buying a private jet, the price of a house is likely going to be the most expensive outlay of money you ever experience. And rightly so, we spend so much time in them that it is important to make sure you'll be comfortable for years and years, not just in the short-term. No amount of external research and reading can give you the same feeling as actually experiencing the property itself, but there are challenges to that as well. If you're out of state, or even out of the country, it can be expensive and inefficient to fly in and out just to inspect a house that you're not sure you'll even buy.
So, how do you get past this issue? A buyer's agent can help, in fact they can do much more. But that's further down the track, and if you're considering buying your first home, there are a number of steps you should be taking to get ahead and ensure your first foray onto the property ladder is a solid one.
Prepare for entry
It can be a real hassle getting yourself ready to take a major step in your life and reach for the first rung on the ever-elusive property ladder. In fact, the property market is much more accessible than people give it credit for, and one of the few things that hold people back is personal preparation.
How might saving money affect your ability to access money from a lender?
Once you have made the decision to buy a property for you and your family to live in, taking the right steps soon after will set you on a successful pathway. Saving money is a good start, but if you have a good mortgage broker on hand then it can be a lot easier to secure funding for your purchase. Squirrelling money away is all well and good to build a solid base of capital, but that can be taxing on people.
The Australian Bureau of Statistics (ABS) finds that the average Australian income is approximately $6,000 per month, and if you combine that with a partner then it will rocket right up to $12,000. Saving money might not sound so painful now, but how might that affect your ability to access money from a lender?
Canstar outlines the monthly repayments of various mortgage amounts, and the findings could well be encouraging. Assuming the interest rate is set at 4.25 per cent and the repayment term is 25 years, monthly payments for a loan of $300,000 would amount to only $1,088.80. If the interest rate is lowered by merely 1 per cent, the decrease in repayment costs equates to $189.78, taking the monthly amount below $1,000. In an average household, that's extremely manageable.
If you're looking at more expensive properties, then take the Canstar example of a $1 million mortgage. Monthly repayments amount to $7,258.70 at the interest rate of 4.25 per cent, which is still well below the average monthly income for a family. It doesn't leave an awful lot of spare cash for wriggle room, but it can be done with some perseverance. If your lender's interest rate is lowered by 1 per cent, you could see savings of $632.61 every month, taking monthly repayments down below $6,700.00, or around half of the average household income for two earners.
Home buying is not inaccessible – especially if you have access to initial funds because you've diligently saved for years. Regardless of your income, the right mortgage broker will be able to help you with an affordable loan that could set you up for an enjoyable lifestyle in your very own house.
Some people aren't buying in Australia while already living in the country, and some will be looking from outside of their preferred cities. So, how do these people find the right property for themselves, even when they can't see the house with their own eyes? And what are some of the best strategies for landing your perfect patch of real estate? Take a look below at the three different situations a property agent from Cohen Handler can help you with, and get you into your first home:
1) Coming from overseas?
For a start, not everyone wanting to buy in Australia has ever lived in the country. Some will be drawn by its charm and climate seen on a holiday or business trip, and who could blame them? There are a large number of incoming flights, and that figure is only increasing.
A media release from the Gold Coast Tourism Corporation (GCTC) has outlined progress from Greater China in this respect – year-round flights between the Gold Coast and Hong Kong are a great starting point for more growth elsewhere in the country.
"Importantly, these scheduled services represent a significant increase in access to the Gold Coast from China's tier one and two cities via Hong Kong Airlines' extensive regional network, providing yet another opportunity to build on the Gold Coast's share of Australia's highest yielding international market, China," said Martin Winter, the GCTC CEO.
"To fully optimise tourism demand from China, continued development of aviation access is critically important."
International interest in the country is clearly booming. But if you are one of those people hoping to move to Australia and get straight into your own house, then it will pay to have a team of experts helping you on your way. An associate with Cohen Handler, Walter Nanni, believes that a team of four people is important to keep on hand when keeping a property portfolio – a selling agent, a solicitor, a mortgage broker and a buyer's agent.
However as an owner-occupier in Australia, you won't necessarily need a selling agent because you don't already own property here. So a team of three is manageable – one to ensure the documentation is lined up correctly, one to give access to the required funds and one to give you the best local advice about where to buy and what to look out for. A buyer's agent can even attend an auction for you (and with you, for that matter), keeping in mind a list of your specifications and a solid price ceiling. Paying too much for a property is never a sound move, even if you are emotionally attached to it, so having a guiding hand alongside you will keep your purchase manageable and realistic.
Buying a property can often come down to who makes the fastest move, so if a deal is possible before auction, then it will be important to already have the required paperwork drawn up by your solicitor and have a pre-approved loan to fund the purchase.
Local property agents will be able to provide a detailed suburb overview with all schools, amenities and useful facts about a region.
But where might overseas buyers be looking? If they have a family, schools can be a serious consideration, and the local expert property agents will be able to provide a detailed suburb overview with all schools, amenities and useful facts about a region.
For those not wanting to have a large outlay as their first foray into the Australian property market, finding out which regions are better for buyers is key. The Commonwealth Bank teamed up with CoreLogic RP Data to assign different cities a rating based on what group they were favouring – a one denotes an extreme buyer's market while a five shows an extreme seller's market. As of October 2015, the only major cities in Australia that favoured buyers specifically were Brisbane, Hobart and Darwin, all with a rating of two. While that doesn't leave a lot of scope for purchasing, it is worth noting that smart money is currently going towards Brisbane as it is showing the most potential for future growth.
The Commonwealth Games of 2018 are being held on the Gold Coast, and that could be a fantastic gateway into the Queensland capital. Major developments are already underway that are boosting the south-east of the Sunshine State, but Brisbane is seeing some value-adding projects as well.
The Queensland Budget Mid-Year Fiscal and Economic Review 2015 (MYFER) outlines a bright future for the state, and it's not too far away either. Between January and November last year, more than 50,000 jobs were created, and there is a $1.6 billion Working Queensland employment initiative that is pushing growth in the city and encouraging more population increases. Alongside that, there is a $4 billion plan for new resource projects and a $3 billion dollar integrated resort already underway on Queen's Wharf that is set to boost visitors to the region even more.
The Brisbane property market is also the most affordable of the east coast's major cities – and that's with a strong period of growth over the last two years, seeing a 10 per cent increase, according to the BIS Shrapnel Australian Housing Outlook 2015-18 report. The median house price in the city is $511,300, which is significantly lower than both Sydney and Melbourne prices. Brisbane is a great entry point into the market, and the team at Cohen Handler can help you to find the best property for your needs.
Take the suburb of Chandler, for example. Smart Property Investment research suggests that the median house price here is $1,310,000, and that has shown solid growth over the past year, with a whopping 32.32 per cent increase. Such potential for capital gains is an attractive prospect for not only investors, but also owner-occupiers that are wanting to see solid returns on their purchases a few years down the track.
2) Welcome to Australia
If you've lived in Australia in the past and then moved overseas, you're likely to have noticed how much the country has changed over the past few years. That growth is predicted to continue, and that means you should forget all of your preconceptions about your home country because it's probably very different to when you resided here. However, that shouldn't put you off moving, and as an expat, the hardest part will be moving country, not choosing where to live!
Take Melbourne as a city that is rapidly changing. A report from McCrindle Research suggests that Melbourne will overtake Sydney as the largest-populated city by 2056, reaching nine million residents. And what does a city that is growing do? It expands to accommodate the influx of people. For the CBD, that could mean it will become more crowded, but the Melbourne City Council Plan 2013-17 has outlined how it will combat the continued growth. For a start, there is a major focus on becoming a greener place to live – increased biodiversity will be coupled with a greater amount of tree canopy cover, which will make the city feel much more welcoming and fresh. Greenhouse gas emissions, constantly in the news, will be more closely monitored and managed as well, and that will help to provide a greater quality of life around Melbourne.
What's more, public transport and spaces will be made safer and more accessible to everyone, and that will encourage less use of cars on the roads. According to the City Plan, 27 per cent of people that live in the CBD drive to work, but better public transport could change that dramatically. Wherever you have lived overseas, the quality of living in a city will have been of the utmost importance to you and your family, and it shouldn't be any different returning south.
So, the cultural capital of Australia is growing and there are plans in place to make it more comfortable, but how does that equate to a great place to buy a first home?
As of June 2015, BIS Shrapnel reported that Melbourne had seen growth of 28 per cent over the previous two years, resulting in a median house price of $734,300. While it's more expensive than Brisbane, there could be more opportunities for you and your family in Victoria, and the potential for capital gains is greater should these trends continue. The higher price is also not conducive to many first home buyers, which is why Brisbane might be a more attractive option. However, if you have more capital behind you already, then the more expensive and more expansive markets in Australia will be open to you.
It's still important to ensure your solicitor, mortgage broker and buyer's agent are close at hand in case a swift move has to be made for a property, but as an expat you will have more of an idea about what you want in a house, to really make it feel like home in Australia. There will be some aspects of a property, for example, that you will look out for more so than others, simply because you have experienced property overseas and you know more what kind of creature comforts you'd like to see.
As an expat you will have more of an idea about what you want in a house, to really make it feel like home in Australia.
Whether you're looking above or below that price range, there are options available in St Kilda East, and it's more important to buy in the right region than to buy the right house if you're looking for a sound investment. Residex finds that the street with the lowest median house price in the suburb is Johnson Street which comes in at $921,844, while at the other end of the spectrum Vadlure Avenue sits at $3,610,301.Even if you're still figuring those sorts of things out, a buyer's agent will be able to point you in the right direction – like towards St Kilda East, a recommendation from the specialists at Cohen Handler. Residex data suggests that the median house price in the suburb sits at $1,307,000, but it's worth remembering that as a median, it's only a halfway point.
There's something for every expat in St Kilda East, and even more so in greater Melbourne as well.
3) Childhood memories win out
If you ever look back on your youth with a great fondness, you may have considered moving back into your childhood home, or at least the same suburb. And why wouldn't you? It's likely that you had some fantastic fun here, and would have spent some quality time with your family. If you were living in Sydney, then it might have been heading over to Luna Park and spending a day on the rides or even catching a tram out to Bondi Beach and catching some waves in the sun and sand.
But as you grew up, your career or your family may have taken you elsewhere in the country, and now you'd like to move back. How do you go about doing something like that? Well, you've already got the knowledge of the area, and that is of the utmost importance when deciding where in a city you are wanting to buy. The next part is deciding which house is going to suit your needs. If you have your eye on the home that you grew up in, then chances are it's not on the market. There might be a rare case when your old family home happens to be for sale when you decide to look at buying a first home for yourself, but it's more than likely that it'll be off-market.
How might you get around this?
A buyer's agent in Sydney is the easiest solution. Expert negotiation will be employed to see if the existing owner can be convinced to part with your childhood block, and such an off-market approach can leave you with a completed transaction that doesn't have any competition from other buyers. Sounds good, right?
But if you don't want to move into your ex-family home but just into a nearby neighbourhood or the same street, a buyer's agent will also be able to present a detailed property report on a number of available patches in your chosen region. Don't have a specific street to consider? With just the name of a suburb, the best streets to buy on can be investigated by the team. For example, Smart Property Investment states that the suburb of Zetland has a median house price of $1,552,000, and shows growth in the past three years of 84.21 per cent. That's staggering, and Residex data points out that the most expensive street in Zetland actually has a median house price of $1,737,333 – Austin Grove.
CoreLogic RP Data lists New South Wales as having the most suburbs in all of Australia with a median house price of more than $1 million. There were 341 suburbs on or over this price range as of December 2015, which is an increase of 84 over the previous year. BIS Shrapnel lists Sydney as having the highest median price in the country, and it has grown dramatically over the last 24 months (44 per cent) to $1,034,100. Zetland is one of the fastest growing suburbs in Australia's biggest city, and while it still lies a long way above the median house price of greater Sydney, it is significantly more affordable at the top end than St Kilda East.
Taking into account every aspect of your preferred suburb, Cohen Handler will find you the best property to suit your needs, and as your first home it will be important to make sure it's a positive experience. It could be the first owner-occupied place your young ones live in, and as such you're going to want to make sure it's as comfortable as can be.
Moving up in the world
Every home buyer is different, and whether you are buying from overseas as an international or expat, or you are in the country but don't live anywhere near your preferred suburb, a specialist property agent that knows the local areas will be able to assist you.
Detailed reports will help you to choose the right neighbourhood, and then property inspections will allow you to narrow that down even further. You don't even have to be in Australia to purchase the property of your dreams. Once you have a selection and want to make the final move, either in the auction room or in a prior settlement, the continued help of a buyer's agent will ensure that you get the best price for your first home, allowing you a smooth move and a great (and rare) first-home -buying experience.