When i arrived in Australia, i was privileged to be accommodated by my Uncle and his family in the Southwest of Sydney. As i got used to my new environs, I would take regular walks around the neighborhood, admiring the picturesque houses that lined the various streets I meandered through. There was only one thought in my head - “When will I ever have the opportunity to own my own home?’
It should come as no surprise that we all have asked ourselves this million-dollar question at some point in our lives while living here in Australia. However, with recent hikes in interest rates and the ever-increasing cost of acquiring properties, the dream of owning your own home might seem to be a far-fetched one. But it need not be!
In the few years I have delved into the property market and the bits and pieces of experience I have garnered, there are a few hints and tips I have come to realise are somewhat essential for people who are looking to own their own property. The list below is definitely not an exhaustive one by all means but something to get you started.
1. Save! save!! save!!!
To buy a new home in Australia, you would typically require a loan from a bank or credit facility as it is often a very expensive project. An initial deposit usually between 10-30% of the house cost is usually required before the loan is granted so a lot of money has to be saved. There are different saving mechanisms via financial organisations but a common one among Africans and even Asians is where a group of trusted friends save collectively and rotates the recipient of a bulk sum on a periodic basis, usually monthly. This is a very good way to save because it forces you to be disciplined and it gives you access to bulk savings at zero interest.
2. Information is key
It can take a few years to attain a reasonable amount to be presented as a deposit. During this period, keep an eye out for financial aids and grants from the government and other institutions which supports first homeowners.
3. Your choice of location
Whilst the choice of where your home would be might be driven by personal preference and circumstance, it is important to understand that the location of the property has a large impact on its value. In some states, it could cost twice as much to own a home when compared to another state. Property prices can also vary significantly when comparing a capital city to other towns within the state. Hence, it is worth studying the property market across the different states and territories to know what will work for you.
4. Buy vs Build
This is another decision you will need to make: to buy a house or to build. Each has its own pros and cons but it would depend on your personal preference and circumstance as well. Buying your house is usually a quicker process as the house is already built. The flip side to buying a home though is “what you see is what you get” as there is usually no room to make any changes or customise the house. Building however usually entails buying the land either from a developer or from a builder and then building from the scratch. This can be a slow and arduous process that involves multiple steps and documentation. It can be financially challenging as well but has the advantage of choosing your own builder and customising your home to your own taste.
5. Draw up a budget
It is really important to know what your budget is from start to completion, factoring your income generating capacity till the project is completed. Bear in mind that there are a lot of costs to consider, some of which you might not have been aware of at the commencement of the project so it would be a good idea to keep a buffer for the "rainy" day. It is also very easy to go over and beyond your budget especially when you build as a result of the thrill with customising your home and these costs do add up, so be aware. It is also important to note that a change in government policy can better or worsen your financial situation. For example, a change in interest rate can impact your loan repayments significantly.
5. Ask questions, exchange ideas.
An African adage says “whoever asks questions does not lose his way” and this is especially true when looking to buy or build your house. Seek advice from friends, colleagues, builders and even the internet on all aspects pertaining to the property market. It is also helpful to visit display homes to get fresh ideas that you can improve on.
All things considered, the decision of what, when and how to buy your property is subjective and based on personal circumstance and there is no one-size-fits-all approach.
Owing your first home is probably one of the greatest hurdles you will face in Australia but do not despair, it is an achievable goal when you plan ahead. It will mark a great turning point for you and give you a sense of fulfillment. Not everyone will have the means or opportunity to own their own home but is definitely worth considering as it has countless benefits both in the short and long term.
P.S - Any advice given here is based solely on my personal experience and does not supersede information sought from a financial adviser or broker.
Credit: Patrick O.