Hello

Most people would have received advice at some stage in their life that if you are not completely sure of something then don’t do it. It is a natural fall-back position to not do something. From not taking a holiday, not trying new food, not buying that car, maybe even not asking that person out. So why would such a huge decision like buying a house be any different? Shouldn’t you be 100% positive of your decision and sure that you won’t regret that decision in the future? In theory yes! However, there can be a bigger risk. That bigger risk could be not buying something.

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I can’t promise that real estate prices will rise every year, but I can look at previous data and see that Melbourne real estate over the medium to long term is almost always a good investment. Of course, there are some exceptions like new apartments haven’t always performed well. In general, though property has been a very good investment. Plus, unlike a share portfolio you get to live in your property.

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The reason that I say that the bigger risk could be not buying something is that you may not be able to save money as quickly as property prices rise. Also, if you do get into a house then you can stop paying rent and put that money towards your mortgage. Buying a property is usually a moving target. I’ve seen buyers take 2 or more years to purchase a house. When the market is hot that could mean a house that you saw in your first month of looking sold for $1,000,000 and that same house may be worth $1,150,000 two years later. Earning $150,000 of after tax money is really hard work for most people.

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An issue I have seen over the years particularly with younger buyers is that they get a lot of advice from well meaning people. Those people often go with that natural fall back position of advising them to not buy something. Or maybe they are so motivated to make sure that they don’t overpay that they talk them out of several good buys. As much as our parents are a great source of guidance throughout our lives, they can be guilty of this.

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So, what is the best way to approach the uneasiness that comes with such a big decision like buying a house? Firstly, work out what you can afford and speak to a mortgage broker to confirm how much you can borrow. Secondly educate yourself on what houses within your preferred area are selling for. This is easy with the amount of data available online. Thirdly get busy and go to open houses, ask questions and if you like something and it ticks the most important boxes have a crack at it. It’s not the worst idea to discuss your situation with your trusted inner circle but remember everyone’s journey is different.