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Blog Articles

26 Jul

When is it a good time to buy your first home?


Let me tell you a tale of two brothers.

One bought his first house 10 years ago, and is now settled down with a family. The other went travelling, recently returned to New Zealand, and is now looking to buy his first home.

When is it a good time to buy your first home?

'Mr Settled' thinks his brother would be crazy to buy a house in the current market.

His rationale is that 10 years ago you could get so much more for your money, and the options available today in the same price bracket are pretty uninspiring - being either too small, rundown or 'on the wrong side of town'.

But here's the thing, unless you can turn back time, there's no going back to the property market of 2009.

And even if house prices drop drastically in the future, it won't be in isolation. A depressed market brings with it other factors, such as higher Interest rates and employment uncertainties. So you're still on the backfoot.

I see it time and again. Well-meaning friends and family members giving well-meaning advice.

But there really is no better time to buy than 'now'. You won't get a foot on the proverbial ladder by doing nothing.

Now, let me tell you another tale ...

A man in his 20s bought a house in Parkvale, Tauranga, for $270,000. A few years later he bought a second house in Gate Pa - both suburbs being more affordable, albeit less trendy.

In 2007, the financial crisis hit, and he sold one of his houses at a loss. The other he kept for another five years and sold for a significant profit.

Since then he has purchased two further homes and now, like Mr Settled, is happily ensconced with his family in his 'forever home'.

That man was me.

Climbing the ladder

There's a reason they call it the property ladder. For most people, you start at the bottom and you work your way up. Each property is a stepping stone.

Which brings me to another important piece of advice for first home buyers - your first home doesn't have to be your end home.

Viewing your first home as a means to an end immediately opens up your options. Buying a smaller home than you would like and/or looking outside your desired area is better than not buying a house at all.

In the current market, interest rates are low and rents are high. If you do the sums you will most likely find that for an entry-level home there's not much difference between renting and servicing a mortgage.

Of course everyone's circumstances are different and a mortgage is a big commitment, but even if you make plans to buy in one, or two years' time, you will be setting yourself on the path to becoming a homeowner, and ultimately in one of the best superannuation schemes you can be in!

So if you come across a first home buyer, encourage them to get on the ladder!

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