First home buyer - any and all advice

[nun]

I'm a first home buyer in Melbourne with pre-approval for finance for up to 570k.

I'm looking at two bedroom flats mostly but they are very mixed and the one-bedders for around 450k look really nice. I guess any advice from people who are experienced in the property market would be really appreciated, primarily around:

- how much more in cap growth you'd expect from a two-bedder verse a one-bedder / whether generally (specifically in relation to real property as a financial investment) two bedders really are that much better

- whether the emotional stress / burden of a max loan was worth it in retrospect from people who have been through the process

- whether people were happier with prioritising location verses other qualities like floor plan / size / light e.t.c - acknowleding how subjective that is.

Really appreciate any and all takes!

Cheers

 

[olaitan]

@nun Even if you don't care about growth, be mindful that you are using your single stamp duty concession. If you have a 1 bed, it will likely not be suitable for a couple if you work from home, or if you decide to have a child.
Upsizing to a 2 bed will set you back another 30-40k in stamp duty.

 

[nun]

@olaitan Good point hadn't thought about this

 

[leannec]

@olaitan Sorry, can you eli5 this advice? I believe you're saying that buying the cheaper place means you can utilise more of your stamp duty concession which might be a valuable consideration since this is a first property compared to spending more and not utilising much or any of fhb stamp duty savings?

 

[olaitan]

@leannec No, I'm saying that you only get the stamp duty concession once and that 1 bed apartments are usually just a temporary situation that might not even last you 3 years. Do you've basically flushed it down the toilet and upgrading to a 2 bed will be very expensive.

I'm not sure about Sydney, but in every other state you can get a 2 bed inner ring apartment for below the stamp duty exemption threshold.

 

[preshess]

@olaitan It’s really hard to do this in Sydney, most 2 bedders are over $650k.

 

[nun]

@preshess Yeah in melb its

 

[resjudicata]

@nun Here are some things to consider that I have found in my 2 bedder:

- Aspect. Morning sun might be really important to you. I face the south but have great views, which I personally prefer, and with big windows I get enough light.

- Location. This was number one for me. PT, shops and a good pub, less than 7km from the city.

- Floorplan. I loathe bedrooms off a living area and love the separation having a hall makes. It makes the place feel much bigger mentally. A separate toilet was also a plus.

I know two couples who had 1 beds and one lasted a year and rented it out, renting themselves somewhere bigger. The other broke up after 5 months. So I wouldn't as I feel the two bed gives more flexibility to your life.

You can grow, you can have a study that gets shut away at the end of the day, you can get a roommate if you need the money. Some say easier to rent too but I don't know how much weight that holds at the moment.

Sound advice says you're going to live there for a while. Maybe if you can compromise cosmetic things that you can change after a couple of years you might be able to find yourself not maxing out your budget. The points above are all the bones of the place, unchangeable, so I'd try not to get blinded by trendy tapware or the splashback. They're not too much to swap out and then you really get to make it your home.

 

[nun]

@resjudicata All good points cheers mate. Floorplan stuff is definitely important, so many places I've seen are two bedrooms hugging one square living space

 

[annem2017]

@nun Two bed flat is going to give you lots more options. For me, I bought my first property & PPOR with a five year plan. I also considered the longer term. Questions I asked myself:

• could a partner live here with me?
• could I have a baby here?
• could a parent/family member move in with me if they needed help?
• could I rent out some, or all of the property to other people? Who? To what demographic / how wide is it / how much can I get in rent and to does it pay my costs?
• could my family and friends who live in other cities visit me here/stay?
• could I live here a medium/long time?
• could I live here when I’m older?

 

[nun]

@annem2017 Cheers these are great prompts, really useful

 

[resjudicata]

@nun Hi there , Melbourne property is as diverse as the population itself . Dont expect much capital growth unless you buy in the blue chip suburbs .

Most ' growth' is achieved from a new build onwards, but with the cost of building materials , who knows what a fair price is these days and whether it will appreciate .

450k for a 1 bed is hugely overpriced i think unless in a blue chip - try doing a sold search on domain to see what prices are being asked v achieved ...form this weekends auctions , no 2 beds sold at auction and were passed in , suggesting what people want to sell for and what people are willing to spend at the moment are vastly different

I suggest you carefully research apartments in Melbourne, listen to Michael Yardney podcasts, often the true value is in the land component.

You also need to consider the body corporate , rates and water rates and amenities fees which are generally double for a 2 bed compared to a 1 bed . It the complex has a pool, gym cinema etc your body corp fees will reflect this .

If you're going to spend that kind of money you should be looking in blue chip suburbs not places like Preston or box hill with never ending high rise additions .

Consider privacy and aspect - what view do you want to wake up to and what direction does the property face for best light .

ventilation is a big problem for apartments as air flow is restricted meaning it get very stuff in the warm months .

I would definitely look at a low rise building and you need to research the surrounding streets to make sure that any view you have won't get built out in the next few years - a real problem for apartment owners ...

noise and privacy is a big issue ..apartment balconies are stacked side to side and on top and below meaning you get to hear everything about your neighbours and sample their cooking smells as well !

Finally, dont rush in, don't buy on emotions and go to lots of opens and auctions on the weekend . It's a buyers market ( if you can afford it ) so don't rush in !

if i had my time again I'd but a townhouse .....

 

[nun]

@resjudicata Thanks mate. Yeah I'm mostly looking in Brunny Easy / Richmond / North Melbourne, so the idea would be that those areas will appreciate to some degree while still being affordable for a decent spot with the money I have.

I think the town-house thing is just a question of moving a bit further out of the city, and as someone new here who has lived in the country I'm very over both commutes and not being able to have street life on my doorstep.

Thanks for the advice!

Thanks for the

 

[kris8585]

@nun My first property was an apartment and I loved it. In general growth will be less than a house/land but you should still get some. I sold after a few years and upgraded but you might not want to. I loved my flat.

 

[sky32]

@nun We're looking to buy later this year.. think the market where we are will be lower and its around twice the price range you are citing and thus, more likely to bigger "corrections".

I'd look into FHSS if you aren't buying right now (this FY) and prolly talk with an account as this might be a good way to max your deposit situation.

What I have said to my Mrs who looks at property for R&R... uninstall all realestate stuff after we buy. I don't want her getting buyers remorse.

I'd be much keener on the 2 bedrooms if I were you. As someone else pointed out stamp duty, but lifestyle and resale for if/when you go bigger. Eh some random redditor's 2C.