How You Can Buy Your First Home Even When It Seems Impossible (Part One)

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I went to dinner with a group of women last night to celebrate a birthday.
The birthday girl (BG) was the only person I knew, so I had to make an effort and mix. I worked my way around the table to meet and speak with the other women to get to know them. In true Sydney fashion, the conversations got around to my favorite subject – Property.

I discovered something that I had heard about but never really understood.  A repetitive and slightly worrying story was coming out.
This was a group of lovely, intelligent, upwardly mobile 30 somethings. They all have good jobs.

But almost every one of them was lamenting the fact that they would never be able to buy a home in Sydney.

first home

There was this deep sense of resignation, maybe even grief.
Some had taken the decision to buy elsewhere but got caught in the snake pit. They sought  the help of a professional but had the misfortune of ending up with one of those self-serving vultures who relieved them of  enough money to feed a small African nation to buy an overpriced property in the back blocks of Queensland.

It makes me so freaking mad. The media has a lot to answer for, with its misinformation and hype.

I’m not saying that buying in Sydney is the be all and end all. But I do believe that if you work in a decent job, you should be able to have the things that are important to you. If owning a home in the city you work in is important, then it’s on the top of the list.

If this generation does not get financially educated, they will end up in their 50s with little financial security other than a job which I’m told is an acronym for Just Over Broke.

You might say that a house with a big mortgage is not financial security.
I would argue that if you buy the right property at the right price in a capital city. It should go close to doubling its value in ten years and triple or even quadruple in 20. So even if you only pay the minimum payments on your mortgage over 30 years, you will make a sh*t load of cash in capital growth.

And the best bit? If you ever sell it while it’s still your home, the profit should be tax-free.

To prove a point I plotted out the median house prices since 1976 for Sydney, Melbourne, Perth and Brisbane.

Sorry Adelaide, Canberra, Hobart and Darwin, I ran out of steam. They have at least doubled each decade from 1976 and in the few cases where they fell short, they over-performed in the preceding or the following decade.

first home

A lot of gurus would say that your family home is not an investment, it’s a liability. I disagree.

If you are smart, your home is your first investment.  And if nothing changes other than the fact that the rent you are currently paying gets paid into your mortgage, it will deliver masses of equity over time.

But wait, it gets better!

Once you have got a place to call your own and the glorious mortgage to go with it, you can get to work and manufacture some instant equity by giving it a makeover. As long as you are measured in how much and in what areas you spend money.

If you can’t manage the funds for a reno, just sit back and wait a while for it to grow. Then get it revalued and pull out some equity to plant your money tree.

What I can see is missing with our thirty-somethings (and even our forty, fifty and sixty-somethings) is financial education and a bit of resourcefulness.

You might be asking how do you get started. In part 2, I will share with you three ways to overcome a shortfall in money to get into your first property.

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