Why now is the perfect time to buy your first home

WITH shaky prices, you might think it’s a bad time to enter the property market. But jumping in now could actually be the best decision.

DO YOU recall the feeling you experienced when you first got the chance to sit in the driver’s seat of a car, knowing that you were about to take control for the first time?

As you turn that key, or these days press the button, the first emotion is generally outright fear. I know that was my experience.

It is this type of fear that I often hear as a reason why people don’t buy property. But even if prices are falling right now, that’s no reason to be fearful.

THE STRATEGY

The first thing that you need to understand when it comes to buying property is that you are not in the game of picking the top or the bottom of a market.

There are plenty of gurus and experts who have tried and failed with picking markets, so you don’t need to add yourself to the list.

Since property is a long-term investment, picking the right time is not as important as you might think.

Another money myth that I hear regularly is that all the good properties are gone.

This is just not the case. At any time, there are good investment-grade properties to buy.

Which leads us to the strategy: It’s always a good time to buy property.

THE WHY FACTORS

So, why do I think now is a good time to buy property? Let’s look at some of the things happening here and overseas that support the strategy.

Before I do, it is important to understand the market conditions.

The good news for those worried about buying at the peak, is that the last cycle peak was in 2017. Since then, all the capital cities have seen declines in value.

But wait, what? Didn’t you say now was a good time to buy.

Despite the falling prices, the thing I know is that property is a long-term game, and over time, prices will rise.

And right now, there are a number of factors that when considered together, will lead to higher prices over the longer term.

Here are a few for you to consider.

First, population growth. Data suggests the Australian population is forecast to grow by between 3 million and 4 million people over the next 10 years. That is the equivalent of Canberra every year for 10 years.

The conditions are ripe for first home buyers.

The significant portion of this growth is coming from immigration, especially from China.

More people means more demand for housing.

Second is the low-interest-rate environment. With inflation being under control or within government expectations, a low-interest-rate environment is likely to remain for a little longer yet.

Recent lending restrictions imposed by the Australian Prudential Regulation Authority that have been affecting investors have been relaxed, to an extent, which will bring investors back to the market.

Low interest rates mean more affordability, which leads to more demand.

Third, global markets are experiencing growth. As markets grow there is more wealth created, which means more people are able to invest.

And as you now know, more people investing means more demand, which, yep, means rising prices.

Finally, the changing nature of the family demographic is resulting in more demand.

There are now more single-person homes. People are marrying later and having kids later, which results in more demand for homes, especially units close to capital cities.

BE PREPARED

So, knowing these factors, it is a highly reasonable expectation that prices are going to rise over the longer term.

With a couple of cautionary considerations.

As with any significant purchase, you need to ensure that you only spend what you can afford.

It is important to consider what your repayments are going to be at current interest rates and allow some buffer for the likely event that rates will rise over the time that you are going to hold your property.

Everyone has heard property investing is all about location, location, location.

This means sticking to major capital cities where the demand factors are going to be strongest, and only buy properties that match these factors.

It’s not as important that you love the property when you are an investor, but that it is attractive to a renter, which means being close to the city and amenities.

With all this information in hand, you are now able to overcome that fear that may have held you back before, and get in the game.

It’s like the feeling you had after your first drive. With just a little bit of experience and information, you now know that driving is something you can do. Buying property is the same. Get in the market and start building your financial future.

Andrew Woodward is a mindshift.money accredited money coach based in Sydney who teaches people to take control of their money and invest for their future, simply and efficiently. Sign up for his free weekly money tips at his theinvestorsway.com.au