First Home Buyers
As we quickly approach the end of 2021, it’s time to set goals and expectations for the year ahead. For some of you, owning your first home may be part of your goals. I would encourage you to consider the following advice before pulling the trigger on that first home.
You must have heard of the 30 percent rule at some point in your adult life. Whether it’s from a parent, or friend, or Youtube video. Chances are the 30 percent rule has come up. For those unfamiliar with the reference, ’30 percent’ is the general rule of thumb for how much of your salary should be allocated to housing. It is considered a sensible portion to allocate on a fundamental aspect to one’s survival.
A discussion on the housing market isn’t complete without evaluating its two components. Those components are of course the owner occupier and rental markets. I’ve previously described the merits of entering into each of these sub-markets. However, the following post analyses the interplay between these components, and how they offset each other to remain in balance.
It should come as no surprise that home ownership is expensive. However, what may be surprising is the dollar value that you would need to buying a home. The media constantly portrays millennials as being victim to an overpriced housing market. Millennials also represent a material portion of the working population and have decades of future earning potential. Perhaps part of the issue is a lack of understanding of how much is needed to buy a home.
When you’ve been in the real estate industry for as long as I have, you pick up a few things. Prior to arriving in Australia, I probably never held a hammer, let alone used one. Now, I frequently fix air-conditioning units, hot water heaters, and other fixtures at my properties. I am certainly no handy-man, but I know enough to be dangerous.
Our first home in Australia was akin to a shoe-box. It was the second-storey of a duplex unit that was barely more than 600 square feet of living space. We affectionately called it our ‘tree-top oasis’. Now we lived here more out of necessity than choice. Having just arrived from India, we didn’t possess the sound references or prior rental history needed to secure a larger home.
The amount of space you need will change over time. Where you are in life, what are your goals, how much flexibility you need, where you’re located. These are all aspects that will determine whether apartment or house living better suits your needs.
My wife and I have never missed an opportunity to lecture my son on strong financial hygiene practices. Throughout his formative years, and even well into his 20s, we made sure to throw in a few jabs and off-handed remarks about his spending habits.
When building a new home, an exciting step in the journey is to complete the pre-start/pre-construction process. If you haven’t been through it previously, it’s akin to your first time in a pastry or candy store when you were a kid!
Being a first home buyer is a pivotal moment in any person’s life. This is one purchase that is accompanied with a sense of achievement. I still remember my level of excitement when purchasing my home back in my 20s; a small one-bedroom flat in a suburb of Mumbai.
Owning your first home is emblematic of the Australian dream, as it is in many other countries. It is a significant achievement at any stage of life, and is a product of one’s strong personal efforts. However, first home ownership is a burdensome and complicated process for the uninitiated.