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Ben Kingsley Blog post by Ben Kingsley

When is the RIGHT Time to buy your First Home?

In the November issue of Money Magazine I contributed to an article written by Maria Bekiaris on the 10 Home Buyer Traps, which was all about the pitfalls waiting for home buyers to avoid costly mistakes. (It’s a great article by Maria, so get the November issue of Money).

The article got me thinking about the first homer buyers and how I often get asked when is the right time to buy your first home? So I thought I’d share my views on this topic in this month EW Newsletter

When I’m asked the question “when is the right time to buy your first home?”, my reply is in fact a ‘series of questions back to them’ so I can ascertain a better understanding of their motivation/s.


My very first question is  – Where are you looking and how much are you looking to spend?.

As a property and wealth advisor, this is the most important question for anyone who is interested in buying their first home.


What if I said to you now is the best time to buy your first home and you go out and buy a property say worth $500,000.  That $500,000 property is going to cost about $25,000 in buying costs (Stamp Duty, Legal’s etc).  Then you are going to have to pay interest on the loan – say the loan is $450,000 @ 6.5% so just the interest over a 12 month period is $29,250.  So total this all up and you get over $54,000 in costs in year 1.

Therefore as a property advisor, what if I didn’t think the area or property you are going to buy was going to grow in value in the next 12 months? Well, the stamp duty is not going to be a saving because that is going to be a cost you will incur whenever you eventually do decide to buy (unless you are constructing a home).  However the interest cost could be a huge saving (!) because if that property doesn’t grow in value then my advice to buy now may cost that client $30,000 in interest for a asset that hasn’t moved in value.  Money that could have been better used to build up a greater deposit potentially.


My next question is – Why are you looking to buy?

If the response is all about, needing to get our own place for “X” reason or because we want to make a lifestyle purchase or anything that doesn’t relate back to how this impacts their financial or wealth position, then the first question I ask could be considered null and void.

If they are choosing to do it for ‘lifestyle’ reasons then the final question I’m interested in asking is can you afford to buy what you want – today as well as tomorrow?

Too often first home buyers buy property based on their current circumstance and don’t factor in any further changes to their lives, such as starting a family, which has a huge impact on both incomes and additional costs to a household.

Therefore you must be in position to afford the property both today and tomorrow and if it’s a lifestyle decision then now is as good as any time to buy.


So what about the folks who do care that the property they buy is going to perform and build their wealth story?  Well the timing, location and the price point they buy at in that location is going to be critical to ensure we preserve their cash and also hopefully ensure they see immediate growth in the value of the property.  Therefore to work out the RIGHT TIME to buy is all about watch the market in the area they are looking to buy in.  If values are stagnant or declining keep saving those penny’s, if the market is showing signs of value movement then you are ready, if the values of the property in the area you are steadily growing then now is the time to buy.

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