If you're a first-home buyers who's feeling left behind by the market, here are four ways to boost your chances of securing a home without busting the bank.
1. Set your priorities
Most Kiwis have more house-buying experience than they think, even those who are new to the market. If you're a first-home buyer, think about the homes you have lived in - what qualities made your life better, what did you absolutely hate?
Start your property search
Sit down and write a short list of "must-haves" for your home. It’s important that the priorities you list realistically reflect the life you lead and what's important to you. Do you value a short commute to work over a large back garden? Do you need lots of storage and a big kitchen or are you minimalist who likes to eat out? It’s fine to include ‘nice-to-haves’, but make sure you’re clear with yourself on what you’re willing to negotiate on, and what you’re not.
You should also draw up a "must-not" list. These are the things you can't or shouldn't compromise on. Some people can't stand the thought of having neighbours above them or are unable to take on even the simplest DIY projects. Try to restrict this list to just one or two deal-breakers as the more flexibility you have, the more houses you can consider.
2. Your first house doesn't need to be your last
While some Kiwis relish home-makeovers and flipping for profit, most don't. Generally, buying and selling within short time frames can be expensive, not to mention stressful. But still, your first home is unlikely to be your last. Saving that first deposit is the hardest part – after that, you’re building equity and, in most cases, enjoying capital gain, which helps when it comes to the next step up the property ladder.
Think about what you’ll need in the next five years, not the next 30. If you’re not planning to start a family any time soon, a five bedroom home may be unnecessary.
3. Think about what skills you have
If you have DIY skills, and are willing to learn a few more, a fixer-upper could be your way to land a bargain.
This isn’t for everyone, as you do need some experience to know how much you’re taking on, whether you’re up to the job, and to be able to assess if there are any jobs where you’ll need to bring in a professional.
Some jobs are simple and can add value straight away, such as a fresh lick of paint and a tidy of the garden. When you're buying, think about the quality of the flow and the strength of the building. Don't get put off by tired cabinetry, peeling paint and unfashionable kitchen and bathroom tiles.
However, just remember you’ll be living with someone else's poor fittings and fixtures until you upgrade.
4. Put past experience to use
Apartments can be a good way to snap up a bargain, and if you’ve lived in one while renting, you’ve got a leg up on the competition.
You already know what to look for to make sure the place is good quality, doesn’t have noise issues, and has decent neighbours.
There’s just one catch. Don’t forget that as a renter you probably didn’t have to deal with body corp issues.
Ask for the minutes of meetings, and all other records. Read them with a fine tooth comb to make sure you don’t get into a situation where you’re on the hook for scheduled building repairs, or any other budget blowouts.
- Frances Cook is the host of the personal finance podcast Cooking the Books. She is not a financial adviser, and all information is general in nature. For individual advice, see a financial adviser.
Listen to Cooking the Books podcasts below:
