The Ideal First Home (What The Evidence Says)

The Ideal First Home (What The Evidence Says)

Looking for your first property can often feel overwhelming, leaving you feeling like you’re out of your depth. You don’t always know what you’re looking for or what’s going to serve you best in the long term. Fortunately, this guide is here to help. We take a look at some practical and evidence-based things you should be looking for when searching for your ideal first home. Here’s everything you need to know. 

It should be affordable

Your number one concern for a first home should be affordability. You want to ensure that it’s affordable when you take into account everything, including mortgage taxes, insurance, and maintenance. All of these outgoings should be sustainable. According to financial experts, housing should always remain below 28% of gross monthly income (that means income before taxes). And total debt should always be below 36% of total income.

Many people buying property for the first time get into the habit of overextending themselves. Later on, they regret it. While they might have extra space and it could be nice, it taxes them financially and they can’t move forward properly with their lives. 

Plan to stay long-term

An ideal first home should also be somewhere you plan to stay long-term. Research suggests that people who move around often are less financially stable than they’d like to be. You should only buy property if you want to stay between five and ten years. This is because transaction costs are between five and ten percent of the value of the home on most properties. If you don’t stay for this length of time, it becomes difficult to benefit from appreciation and equity building in your home. Often you’re in no better position than if you’d simply rented accommodation. 

Minimal maintenance

You also want your ideal first home to have minimal maintenance. This is one of the reasons why so many young people are now buying new townhomes. These properties often come with warranties and fresh wiring and plumbing that is unlikely to break down in the near term. 

Unfortunately, some older properties have much higher maintenance costs. For many people, the costs of running a property can run at 3% of the total value per year, or perhaps even more, depending on the state of dilapidation. When outgoings become high, it becomes more challenging to manage a property and turn it into a financial success. 

Reasonable size

An ideal first home should also be reasonably sized. Most people start between 1,250 and 2,000 square feet. While a 4,000 square foot home or greater is highly desirable, that’s only usually affordable once people are established in their careers and further on through their lives. 

Proper location

Finally, the location matters. The ideal first home should have:

• Decent job access
• Low crime
• Be near to good schools
• Be in an area with significant growth potential

The best locations are often those which are close to planned developments in the future, such as new rail lines or shopping centres.