Advice for would be first home buyers

Despite recent market volatility, there is still strong demand for property among first home buyers, a business writer says.

Susan Edmunds is former property reporter and now business editor at Stuff. She breaks the myths about home ownership and lays out the questions buyers need to ask themselves first in her new book: From Renter to Owner: Practical, Innovative Ways to Buy Your Own Home Today.

Despite prices “going bananas” around 2020 there is still strong appetite for property, Edmunds tells Afternoons.

People who bought at the height in 2021 might be feeling a bit burnt she says, but if you sit tight, you should be right.

“As you're buying for the right reasons, because you want to have a roof over your head, or you want your kids to go to the same school for five years in a row or something like that, then I think it still makes sense to buy a house and it's still a decent decision.

“It's just if you were buying a couple of years ago, hoping to make it quick buck then you might have been a bit burnt.”

Hanging back and waiting for the bubble to burst or picking the bottom of the market is probably not going to work, she says.

“I know people who are still waiting for the bubble to burst like in 2007. So, you do just have to, I think, buy for the right reasons and make a decision and be okay with it.”

New Zealand isn’t a great place to rent and that is why the idea of being a long-term renter hasn’t yet taken hold, she says.

“I can understand why people want to move out into their own homes, they don't want to have to have an inspection every three months, they don't want to be told they can move because someone's moving back into the house.

“I think most people want to end up settled, when it's up to them whether they move on.”

Once you’ve got your deposit together, it can pay to use a broker when mortgage shopping, she says.

“It can be quite helpful at the start to go to a broker and say what needs to be done to my situation to make me more appealing to a bank.

“And that might mean getting your bank account in order and making sure you're not missing payments and you've got a nice saving history and that sort of thing, and getting yourself really tidy and ready for the bank before you put an application.”

Brokers call this bank-ready, she says.

 Buying with friends is increasingly popular, she says.

“I mean, considering that you might flat with these people anyway, you're already living with them. I don't think that that's a huge adjustment for a lot of people to make, to have a friend in the house with them.”

Just get everything legally water-tight, she says.

“I spoke to a lawyer who said when you're in a relationship, it's kind of expected that you're all kind of pitching for the good of the relationship. But maybe that's not the same with your friends.

“So, you need to have more of an agreement, like I will do the deck and you will clean the kitchen or whatever it is.

“And so that when you come out the other end, that's all fairly compensated for."

Good account conduct is something banks will look at, she says, an unexpected overdraft for example might be a red flag.

“I know some people have lots of accounts that they move money between. And occasionally they can get caught out. And that can look quite bad.

“And the banks seem to look for any kind of frivolous spending that keeps happening.”

A property is likely to be your biggest purchase so do your due diligence, she says. If you’re considering an apartment then body corporate minutes are a useful resource.

“I was looking at an apartment a long time ago and it actually did turn out to be leaky. But someone said at that time, that a really good thing to do is to look at the recent minutes of the body corp to see whether they've been discussing any issues.

"And you can also get a building report. But that's quite hard sometimes to do on an apartment because they can't get into the walls, like they would have a house.”

Do get your own building report, she advises.

“I just think for independence and being completely sure that it's subjective choosing your own building report person to go around and inspect the property is probably good for peace of mind when it's such a lot of money involved.”

When your inspecting the property yourself there are things to look out for, she says.

“Look for things like damp, mould, whether the floor is level, because it can be a sign of problems with foundations, and where the light comes from, and what sort of heating it has, the insulation, all those sorts of things are helpful for highlighting problems that could be expensive to fix.”

Is buying the worst house in the best street a myth? There is truth to it, she says.

“I think it's not a bad idea because one of the biggest factors in what your house is worth is what the land is worth, and that's driven by where it is.

“If you can get a house in a nice area, you can always do up the house. Whereas if you buy a really nice house and a dodgy area, you can't necessarily do up the area.

“But then lots of areas tend to do themselves up over time anyway. So as long as you like your house and you like your neighbours I think you can't go too wrong.”

The market is quieter than it was a couple of years back so keep a level head, she says.

“You do have time to think and look around a bit more and make sure that you're getting the right house for you, because I don't think it should be rushed at such a rate.”