First home buyers give up more than just their ideal location

First homebuyer Alex and Paige

EVERYONE seems to have something to say about would-be first home buyers right now. They are entitled, they are picky, and they spend too much on having a good time to save for a deposit.

But it turns out young buyers know exactly what needs to be done and are willing to start from the bottom and work their way up. In fact, they are not just giving up living in their ideal suburb to get a foot on the property ladder. They are also willing to compromise on the type of home too.

New research commissioned by Westpac shows four in five Aussie homeowners prioritise staying within budget as the most important consideration when in the market. And this is up five per cent from 2015, proving young buyers are putting more on the line than ever before.

FROM DEAL-BREAKER TO DEAL-MAKER

Gabriella Shelhot, 26, recently purchased her first property, a one-bedroom apartment in Croydon Park in Sydney’s outer ring of the inner west. But she admitted Croydon Park wasn’t originally on her dream list.

“No, [the suburb] didn’t even come up in my head,” she told news.com.au

“I was hoping for more of the inner west but I could only buy what I could afford, so I had to be open to other suburbs other than the ones I was interested in.”

However, Ms Shelhot quickly learned that sacrificing her desired area was not the first thing that she would have to give up to be able to afford her first home.

“My non-negotiables were a one-bedroom unit with a car space,” she told news.com.au.

“I feel street parking can be a bit stressful, and you know your car is going to be safe in your own car spot. That’s why at first that is what I really wanted. But after I started searching, with a car spot it was so expensive.

“I had been searching and a lot of one-bedders were from $420,000 to $550,000 and I knew my deposit wouldn’t cover that. So when I found one that was in the $300,000 range, that is when I had to tell myself that I was going to have to sacrifice a car space.”

Gabriella Shelhot knows the struggle of sacrifice to be able to buy her first home.

And while living without a car space is perfectly doable — Ms Shelhot is enjoying being a homeowner — she did admit it would still be high on her priority list.

“It is really hard to find a place to park. I live in a cul-de-sac and a lot of the other units don’t have parking either. I have to park either on my street, in an adjoining street, or even across the main road at times,” she said.

“It is a safe street but it is just the stress of finding a spot. I can come home and can be driving around for a good 15 minutes trying to find parking.”

The other thing Ms Shelhot said she hopes to be able to afford one day? An apartment with a dishwasher.

“The other non-negotiable for me was a dishwasher, but now I don’t have a dishwasher in my kitchen. There is no space,” she said.

“I am going to have to save up and renovate so I can get a dishwasher.”

SUCK IT UP

Should first home-buyers just have to learn to deal with the cards they are given? Mortgage Choice CEO John Flavell admits that yes, it is harder than ever for first home-buyers.

Not only are deposits ballooning with house prices, but young buyers are also being locked out of buying an investment property as a way to get a toe in.

“The changes that were affected in terms of pricing, and particularly credit policies by the lenders on the back of the APRA caps on investment lending, it wasn’t middle-aged, middle Australians who have got lots of equity and lots of income that were precluded from buying investment properties. It was first home buyers which were using that as a mechanism to get their foot in onto the ladder,” Mr Flavell told news.com.au.

“The sad thing is they got squeezed out first. The tighter credit affects people at the margins and that is the group of people who have been disadvantaged.”

But while it is difficult for first home-buyers to buy their own home to live in, Mr Flavell also said that maybe they just need to suck it up and adapt.

Mortgage Choice CEO John Flavell says it is hard for first home buyers, but they just need to get on with it.

“Once again, maybe Bernard Salt is right. Maybe the accommodation equivalent of smashed avocado on toast is I want to live in a funky apartment within a 10km radius of the CBD. And maybe they should actually go for a vegemite on toast, which is an apartment which was built in the 60s and is 35 or 40 kilometres out of the CBD,” he told news.com.au.

“You can go into the suburbs, even in Sydney which is our most expensive market, and you can still find yourself an apartment for under $500,000 — if you’re prepared to have vegemite on toast and travel for an hour [to get to work]. But that is kind of what you have to do.

“If people say they want a funky inner city pad within a 10km radius of the CBD, and if that’s in Sydney, they are going to have to suck it up and get on with it. It is a fact of life.”

However, if we take Ms Shelhot as an example, it appears first home-buyers are indeed learning to “suck it up”.

“I think you do have to sacrifice some of your non-negotiables or you might not ever get into the market,” Ms Shelhot told news.com.au.

 

Article by: Julia Corderoy news.com.au


 

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