I was in a café the other day, and I bumped into a young couple I know who have just got engaged. We had a bit of a chat about this and that, and then, because they know what I do for a living, they said: “Cam, we’re thinking about buying our first home, but we’re not sure if we’re ready.” My response was – how do you know if you’re ready if you don’t know what you can afford?
I’ve been having a few conversations like this lately, and I think I know why. It’s because the numbers finally make sense again.
For the first time in years, when people sit down and crunch what they’re paying in rent versus what a mortgage would cost them, they’re realising that whilst the mortgage payment might be higher, at least some of that money is going back into their own pocket rather than their landlord’s.
Three or four years ago, this conversation would have been very different. Back then, house prices were rocketing away from people faster than they could save, and interest rates were climbing alongside them. It was expensive buying an expensive house with expensive money – a triple whammy that made homeownership feel impossible for most first-time buyers.
But the variables have shifted dramatically. Prices have bottomed out, interest rates have come down to reasonable levels, and suddenly, people are looking at their situations thinking, “Actually, I think my numbers might work here.”
The psychological problem
What fascinates me is how many people who come to see me have been financially ready to buy for years, but have convinced themselves otherwise.
I had one client who spent six years building up their deposit – from 10% to 20% to 30%, and finally to 35% before they felt ‘ready’ to buy a $900,000 house. What they should have done was buy that same house five years earlier with half the deposit and made all that extra money through capital growth instead of saving it the hard way!
The real issue isn’t financial readiness – it’s psychological readiness. When someone tells me they don’t know if they’re ready, what they’re saying is they don’t know if they’re ready to be judged by the bank. They’re scared to find out what the result might be, which I understand completely. The hardest thing to put in front of yourself is a mirror.
But what I see all the time is that people underestimate their own horsepower. Many of the first-time buyers I talk to who are worried about their prospects have far more borrowing capacity than they realise. Some could have purchased years ago if they’d just had the confidence to find out where they stood.
The opportunity window
What first-time buyers need to understand is that these market conditions are cyclical.
This window of opportunity will eventually close, and when it does, first-time buyers will be back to moaning about how impossible it all is, just like their parents will be telling them how lucky they were to get in when they did.
I’ve been watching this trend emerge over the past six to twelve months. It’s not just first-time buyers either – existing homeowners are also taking advantage of the same conditions to trade up. The difference is that what you get now is about 10% cheaper and 20% better than it was a couple of years ago. Better location, more bedrooms, better school zones – that sort of thing. In 2022, you were paying 20% more for maybe 10% better, which was terrible value overall.
Don’t wait on the sidelines
The really interesting thing is, that despite prices and interest rates both being more favourable, sales volumes haven’t responded as dramatically as you might expect. There’s this sweet spot in the market that’s creating as good an opportunity as ever to get in, and I think first-time buyers can sense it.
But there’s hesitancy too, and that’s understandable. The world feels uncertain – there’s talk of Trump, wars, recession, job security concerns, and people wondering if rates might fall even further. These are all valid concerns, but they’re also the same concerns that could keep you waiting on the sidelines indefinitely.
Get going – or you’ll never know
My message to first-time buyers is this: if you’re genuinely interested in homeownership, stop assuming you’re not ready and find out where you actually stand. The worst thing that can happen is you discover you need to save a bit more or improve your financial position – but at least you’ll know what you’re working towards instead of just hoping you’ll somehow know when you’re ready.
The opportunity is there. The question is whether you’ll take it or spend another few years wishing you had.
Don’t wait until you feel ‘ready,’ contact me to find out where you stand – you won’t know until you make that first step.