The real estate advice every Melbourne first home buyer should know

Buying a first home in Melbourne: It is the best of times, it is the worst of times. The excitement of buying a house is often tempered by the reality of rising prices, but that doesn’t mean you are locked out of the market.

With the right advice and qualified professionals working alongside you, the road to buying a first Melbourne property can be much smoother than it looks. Here is the advice you need to know to get started.

1) Work out how to save for a first home deposit

It’s easy to get a ballpark figure on what you need to save – usually 10 to 20 per cent of a property’s price. But how much does that mean you need to save every week, fortnight or month?

At the Australian Bureau of Statistics’ (ABS) last count, the average weekly wage in Victoria was $1,454.50 per week. Let’s say you can save 20 per cent of this every week – that gives you $290.90 in the bank weekly, $1,163.60 monthly and $15,126 per year. It could be a decade before you have 20 per cent of Melbourne’s median value ($836,990 according to CoreLogic RP Data).

But you have to remember your savings don’t have to be in line with the median figures. As of September 2016, the ABS measured the average first home buyer loan at $324,300. If that’s borrowing 80 per cent of a property’s value, you’re looking at buying around the $400,000 mark. Understand what is achievable for first home buyers, and tailor your savings goals to that rather than letting yourself be dismayed by big statistics. You’ll get there much faster.

2) Expand your search horizons

If you’re a first home buyer, it’s going to be difficult to secure a three bedroom house in Kew right off the bat. Expanding your search is the key to unlocking the Melbourne property market, especially in the current price environment.

This doesn’t just apply to suburbs – it applies to types of property. Consider looking at two-bedroom apartments instead of houses, or at a fixer-upper instead of the first home of your dreams. Once you own Melbourne property, you’ll start building equity, which can be used to buy bigger and better homes down the line.

3) Determine your First Home Owners Grant eligibility

For example – if you want to buy a first home in the Inner North, Residex data shows that while the median value is nearly at the million dollar mark, it is possible to buy units for under $300,000. Widen your search (with the help of a good real estate agent), and your first home moves that much closer.

The First Home Owners Grant (FHOG) in Victoria gives you up to $10,000 – but only if you meet certain conditions. Many first home buyers misunderstand this, and it can mean their saving goals need to be completely realigned.

You qualify for the FHOG if:

• You are buying a new home
• You are building a new home
• The home is valued at or under $750,000
• You must be at least 18 at settlement or completion of construction
• You (or at least one applicant) are an Australian citizen or permanent resident at the time of settlement or completion of the home’s construction
• You (or at least one applicant) will live in the home as your principle place of residence for at least 12 months, commencing within 12 months of settlement or completion of construction

You do not qualify for the FHOG if:

• You or your partner/spouse have already received the FHOG in Australia
• You or your partner/spouse have owned a home in Australia, either jointly or separately, prior to 1 July 2000
• You have lived in a home in Australia in which you or a partner/spouse owned or part-owned on or after 1 July 2000, for a continuous period of at least six months

These criteria apply even if your spouse/partner is not an applicant with you for the FHOG.

Armed with these tips, you can give yourself a clear idea of when, where and how you could buy your first home. When you’re ready to find something that suits you, speak to the expert team at Nelson Alexander.

Nelson Alexander’s experienced agents will know exactly where to find you the perfect first property.