- Posted By Api User
When it comes to buying your first property, some of the decisions are out of your hands, thanks to the housing market, the economy and whoever decides to lend you whatever sum of money they choose. However, the tide has turned somewhat and things are looking up. Especially if you are ready to buy now!
With Broome's housing market having recorded 6.5% growth for 2019 (source REIWA), and the rate of house prices stabilising, we will see significant numbers of first home buyers finding the confidence to enter the market in 2020.
The urge to buy, to some extent, comes from the improved market conditions, but it’s expected that the Federal Government’s First Home Loan Deposit Scheme will also create a surge. We have record low interest rates and more cuts on the way, APRA has reduced serviceability buffers, there are substantial stamp duty concessions available, and the federal government’s 5% deposit scheme is just months away from implementation.
So, if you do decide to enter the market now, how do you choose between a house and an apartment? Your budget will dictate your choice to some extent, but there are always surprises in store for those who do the ground work. A three-bedroom house may end up being a much better opportunity for you to invest in, than a small apartment. Similarly, a spacious apartment close to town and your place of work may serve your plans better, compared with committing to a huge mortgage for a house that offers more space than you need and maintenance expenses you may not be able to afford. It all comes down to budget, location and your own personal investment goals.
Having said that, the term ‘safe as houses’ did not come from thin air. Apartments may be cheaper overall, but there is something to be said for the security of investing in a house. Apartments are often considered a better entry level choice in terms of pricing, but saving on the buy-in may not necessarily bring you the return you want over the long term. Not only do you get a greater chance of owning a unique and interesting property when you buy a house, the potential for improvement allows you some wiggle room to grow your investment on your terms. An older, more established property, that could do with a little TLC, can be improved through either minor or large-scale renovations. The patient investor that can make steady, quality improvements to a house over time, will be rewarded. This approach to property investment almost always results in greater capacity for capital gains into the future.
The investment potential of the property you choose is an important part of the equation and your choice here will really be influenced by what your long-term property investment goals are. In the case of an apartment, the bulk of the growth potential may be in the building itself, rather than the small piece of land it sits on. When purchasing a house, the land itself becomes the greater part of the asset in many cases, however so much more can be done with the property that improves your capital growth options as well.
When looking for your first investment property, the key things to consider are location, affordability and ongoing costs such as maintenance, body corporate fees, and/or rates. Once these things have all been taken into consideration, you can weigh the potential to add value through renovations, and then you’re better able to decide the true investment potential of the property you choose and make the best decision for your current goals. Remember, your investment portfolio can grow beyond just this property and diversity is key to future success. A strong portfolio will ideally have a diverse mixture of houses and apartments, so you can always go the other way with your next investment.
First National Real Estate doesn’t anticipate sudden changes in property prices between now and the end of the year, but some economists are already suggesting Australia’s housing market may finish the year with prices between three to five percent higher than they were in January. By the time buyers are certain that house prices have returned to growth, which usually takes at least three or four months, the price of an average home may have risen by twenty to thirty thousand dollars or more. For those that are ready to buy now, our recommendation would be to not hold back.