(03) 9020 2905Virgins, it must be said, don’t know what they’re missing.
No matter how countless the hours they spend anticipating, fantasising and obsessing about “it”, they simply can’t know what the fuss is about until they’ve actually done it.
It’s the same thing with virgins of the first home owner variety. They longingly visit open homes. They dream about the picket fence. They fantasise on trips to furniture stores. They save by staying in on Saturday nights, possibly practising not being virgins. (But enough of the Benny Hill smut.)
What first home buyer wannabes really can’t understand is how good things look for them right now. They might read horoscopes, but they can’t see that the stars have aligned for them.
And the stats back it up. It’s as good a time to plough into a first home market as it has been in years.
So, why aren’t first home buyers jumping in head first? Fear?
You’ve got jobs – unemployment is around 5 per cent. You’ve got low interest rates and they’re likely to be heading lower (even if the banks haven’t been passing on the full quid of late). And house prices have been falling for some time.
Bundle all that together and, to me, it reads ‘SALE NOW ON! BARGAINS GALORE!”
Do you want some statistical proof? Australia’s best current measure of home affordability – the latest HIA/Commonwealth Bank Affordability Report – said it’s the best since 2009.
Those stats were compiled before the the Reserve Bank’s recent cuts. And then there’s data showing generally weaker property prices in the last two months.
The first home owner crowd – and you could add those looking to buy a first investment property – should be lining up their ducks. Or counting their coin.
The latest property prices news from RPData/Rismark shows Perth house prices off nearly 3 per cent over the last 12 months. Add inflation onto that and it’s more like a fall of 6 per cent. But falls from the peak of the market are higher than that.
Interest rates. Cut again this week. We’re not sure how much the “bastard banks” will withhold yet, but it comes on top of a big cut last month and a few small cuts last year.
The official cash rate is sitting at 3.5 per cent. The lowest it’s been in modern history is 3 per cent, and that was only a couple of years ago. It means your mortgage is going to be very low to start off with. (But be prepared for it to go much higher over the first five years).
Something that has always annoyed me is the whingeing when prices are apparently “unaffordabile”. This chatter peaks, not coincidentally, after periods of strong growth.
Here’s the thing: If homes are “unaffordable”, people will stop buying. You know, because they can’t “afford” to buy them. And that inevitably happens. So just hold your horses when that happens. It’s not happening now.
Where are the messages going out to first home buyers that now might be a good time to buy? Except, of course, from real estate agents, who believe ever minute is a good time to buy.
Are you simply too scared to buy?
Would it have been better to buy a year ago? When your salary was 5-10 per cent less, when house prices were 5-6 per cent higher than now and when your mortgage would have been $200 a month higher?
Fine if you don’t buy now. But I don’t want to hear any complaining in a few years’ time, when houses prices have started their next upwards cycle.
I’m a fan of buying whenever you can afford to buy. That’s almost irrespective of what’s happening with house prices, the economy and interest rates. Home ownership, with equity built up over the years, is the cornerstone of wealth creation in Australia. And getting on board is three-quarters of the battle.
But don’t think that home ownership is a one-way ticket to riches. It’s a ticket to security, if your time-frame is long enough. Plenty of things can go wrong. You can lose your job. Interest rates can spike hard.
Nothing I’ve written here negates those risks. Taking on a great wad of debt requires the taking on of risk.
But has your time come to lose your virginity?
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and a licensed financial adviser. bruce@debtman.com.au.