Buy Sooner Rather Than Later
It’s the Kiwi way to own our own homes, and buying the first home is always a hurdle. It’s difficult for the current generation to get that first home, but boy it’s worth it.
Most of the baby boomer generation have made their money from a passive investment in their own homes, and most home owners continue to make money. I have been a property advisor and valuer for way too long now, and the clear lessons I have learned from my, and my clients, experiences is that first home buyers need to get into the market and buy as soon as they can.
Often those that have made the most have bought and never sold. Why? Well it’s like this
- Value Growth – It’s true that property values do not always go up, in fact, they can come down (and in the past they have!!), but over time property values grow. Many times over the last thirty years I can recall commentators predicting property prices cannot be sustained and or grow anymore. Logically they may have been right but the market proved them wrong! Don’t expect huge annual growth but steady growth over a long time period. My advice is to buy the first home with a long term outlook, don’t worry too much about the short term, plan for any downturn, and make money over many years.
- Equity Growth – Pay off the mortgage. Pretty simple really, but by reducing the mortgage as fast as possible you have a reducing debt and growing value, and much more flexibility in the future for further investments or to weather bad times.
- Improvements – Usually as a first home buyer you are not purchasing a perfect home. So plan to make some changes and improve the place. Take the right advice though and don’t over-capitalise. Make money by making the home better.
- Time Effect on Money - As with any investment the sooner you invest the better result in the long term. The compounding effect of time on money will mean that an investment in the early to mid-twenties age range will result in a much higher value long term than investing in the early to mid-thirties age range.
If you do not own a home now, make a plan to do so. Talk to advisors, find out how much money you will need, and start looking at the market and what you may be able to buy. It may be surprising what you can do if you have a plan.
Don’t buy the first home you see. Get a feel of the market, and most importantly get the right advice. Talking to most property or financial experts will not cost much and are certainly worth it. Good house hunting!!
This blog article was written with thanks to our guest blogger: Mike Myers, Director of TelferYoung (Taranaki) Limited (Valuers Property Advisors)
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This information is general information only and must not be relied upon as legal advice. A disclosure statement is available here.