First Home Buyer’s Guide: Plan, Prepare, and Build Your Dream Home

Buying or building your first home in Australia is an exciting milestone—but it can feel overwhelming without the right guidance. From deciding whether to build or buy, setting a realistic budget, securing the right financing, and choosing the perfect location, there are plenty of steps to consider. With the Australian property market evolving and new opportunities emerging in booming areas like Brisbane, Perth, and Adelaide, planning and preparation are more important than ever. This guide is here to help you navigate the process with confidence, offering the latest insights, tips, and resources tailored for first-time home buyers.

1. Deciding to Build vs. Buy an Existing Home

Pros and Cons:

• Building a New Home:
  • Pros: Personalisation to your preferences, incorporation of modern designs and energy-efficient technologies, and potential grants like the First Home Owner Grant (FHOG) for new constructions.
  • Cons: Longer timelines, potential for unexpected costs, and the need to secure suitable land.
• Buying an Existing Home:
  • Pros: Established neighborhoods, mature landscaping, and immediate availability.
  • Cons: Potential renovation costs and less opportunity for customisation.

Latest Australian Statistics:

As of September 2024, first-home buyers accounted for 35.4% of the overall home-buying market, surpassing the historical average of 30%.

2. Setting a Budget for Your Home

Estimating Costs:

• Purchase Costs: Include the deposit, stamp duty (with possible concessions for first-home buyers), legal fees, and inspection costs.
• Ongoing Costs: Mortgage repayments, insurance, utilities, maintenance, and council rates.

Budgeting Tips:

• Emergency Fund: Maintain a buffer for unexpected expenses.
• Loan Pre-Approval: Seek pre-approval to understand your borrowing capacity and set realistic property expectations.

3. Securing Finance and Understanding Loans

Loan Types:

• Construction Loans: Designed for building a new home, with funds released in stages as construction progresses.
• Standard Home Loans: For purchasing established properties, offering fixed or variable interest rates.

Government Assistance:

• First Home Guarantee (FHBG): Allows eligible first-home buyers to purchase with as little as a 5% deposit without needing Lenders Mortgage Insurance (LMI).

Recommended Banks and Institutions:

Here are some institutions offering competitive products for first-home buyers:

4. Choosing the Right Location

Booming Locations Across Australia:

• Perth and Adelaide: Expected to record Australia’s strongest house price growth, driven by affordability and demand.
• Brisbane: Experiencing significant property transactions, with a median home price of $780,000, attracting both investors and first-home buyers.
• Sydney: Suburbs like Parramatta, Penrith, and Oran Park are attracting first-home buyers with new developments, improving infrastructure, and access to public transport.
• Melbourne: Growth areas such as Werribee, Craigieburn, and Clyde North offer affordable options and family-friendly amenities.

Factors to Consider:

• Amenities: Proximity to schools, healthcare, shopping centres, and public transport.
• Employment Opportunities: Access to job markets and industries.
• Future Growth: Potential for property value appreciation based on infrastructure developments and urban planning.

5. Understanding Market Trends and Affordability

Current Market Insights:

• Housing Affordability: As of September 2024, housing affordability in Australia has reached a historic low, with average loan repayments consuming 48.6% of the median family income.
• Deposit Requirements: Over the past 12 years, the required deposit for an Australian home-buyer has surged by 99%, nearly doubling the barrier for first-time buyers.

Tips for First-Home Buyers:

• Government Schemes: Explore programs like the First Home Owner Grant (FHOG) and the Help to Buy program, which aim to assist lower-income first-home buyers with lower upfront costs and mortgage repayments.
• Financial Planning: Set clear financial goals, create a budget, and consider consulting a financial adviser to navigate the complexities of home buying.

By thoroughly planning and preparing, you can make informed decisions that align with your financial situation and home-ownership goals. Stay updated with the latest market trends, explore available assistance programs, and choose a location that suits your lifestyle and future aspirations. Read our home building blog for more guidance & expert advise.