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Cost of Waiting to Buy Your First Home: What a 6–12 Month Delay Really Costs
4 Plays5 minutes ago
Is waiting to buy costing you more than you think? In this episode, we break down the real-life story of a first home buyer who lost $114K by delaying his purchase—and how new updates to the First Home Guarantee Scheme could be your ticket into the market. Tune in to learn the true cost of waiting, what the numbers say, and how to make a smarter move today.
Stop guessing about your buying power! Get a FREE personalised home buying assessment with Hunter Galloway. Call 1300 088 065 or visit huntergalloway.com.au
Calculator: https://www.huntergalloway.com.au/mortgage-calculator/
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Transcript
Should You Buy a Home Now or Wait?
00:00:00
Speaker
Should you buy a home now or should you wait? It's probably a question that keeps popping up at night and I've got the answers for you in this video. But first, here's six numbers and I promise you they're gonna make sense. 12, 65, 95, 18, 34 and this scenario.
00:00:14
Speaker
do they mean let me walk you through this scenario Welcome to the buying your first home podcast, your personal guide through the Australian housing market. Here we tackle the big questions and the small details that come up when buying your first home.
00:00:28
Speaker
From financial prep to finding the right neighbourhood, we're here to ensure that you've got all the knowledge at your fingertips.
The Cost of Waiting to Buy a Home
00:00:34
Speaker
So let's take the first step towards unlocking the door to your new home.
00:00:43
Speaker
Let's call our client John. 12 months ago, John was looking to buy an apartment. He saved $65,000 for his deposit, but he wanted to save a little more so he could buy a nicer apartment plus a city. And he's a pretty good saver, so he thought he could save another $30,000 in 12 months.
00:00:56
Speaker
We looked at different scenarios and I even suggested potentially buying what he could afford and upgrading later, um but he wasn't for that. He came back to me just a month ago and he'd saved up that 30 grand. So now he had 95,000 in deposit.
00:01:07
Speaker
But since that initial conversation 12 months ago, Brisbane's unit asking price is nearly up 18%. I'm not making this up. This is straight from SQM Research's weekly price index. And at that time, he'd spent $34,000
Rising Property Prices in Australia
00:01:18
Speaker
on rent. 12 months ago, his deposit would have got him in a nice apartment in the inner city ring. Let's say around $650,000.
00:01:24
Speaker
That same apartment today is now $760,000. So let's run numbers. saved 30 grand in 12 months. so let's run the numbers he's saved thirty grand in twelve months And the meantime, he spent on red And went right.
00:01:36
Speaker
so the twelve months he waited made him a hundred and fourteen thousand dollars worse off ah herte he thought he was doing everything right But if he'd bought a 650K unit 12 months ago, he would have built up 110,000 worth of equity, all instead of having to pay his landlord's mortgage. He would have been paying off his own.
00:01:52
Speaker
This is the reality of the Australian property market
Updates to the First Home Guarantee Scheme
00:01:54
Speaker
at the moment. In the last couple of years, property prices have been going out faster than most people can save. And I know it completely sucks. I speak to dozens of first-time buyers every single week.
00:02:03
Speaker
But don't give up hope because in the rest of this going walk you through all the tips, tricks and loopholes you can use to get your leg up onto the property ladder. Let's start with the big one first. It's definitely a game changer. The first home guarantee scheme is something that allows you to get in the market with a 5% deposit. Until the 1st of October, 2025, it was pretty limited.
00:02:20
Speaker
There were only 35,000 spots. There's strict income limits. It was pretty much a lottery. But the new rules, there's unlimited places. There's no more lottery. You're going to get a spot. They've also removed the income caps. If you meet the criteria, you're eligible.
00:02:31
Speaker
There's also a higher price cap, up to a million dollars in Brisbane, one and a half in Sydney. It's pretty crazy. So October 1st was a pretty big day for my mate John, because this scheme is exactly what would have saved him from his $114,000 disaster.
00:02:42
Speaker
He didn't have access to it 12 months ago, but he does have access to it now. A year ago, when John was looking at that $650,000 apartment, he had the deposit be earned year, just over the income cap.
00:02:55
Speaker
So he didn't qualify for the first firm guarantee scheme, which really left him with two options. Buy with a 10% deposit and pay about $17,000 in lender's mortgage insurance. That goes straight to an insurer never see again. option two, keep saving until you have the 20% deposit, another $65,000 to avoid the lender's mortgage insurance.
00:03:11
Speaker
In his case, he decided, well, I'm not throwing away $17,000 and I'll save more. And that decision cost him $114,000. But today, the new home guarantee scheme killed
Buying vs. Renting: Financial Implications
00:03:20
Speaker
the income cap. John, like a lot of first home buyers, qualifies for the first home guarantee scheme.
00:03:24
Speaker
And he might not get that bigger a apartment he's eyeing off, but he can get in the market with his $95,000 deposit. That's over 12% on the same apartment. And zero lenders mortgage insurance. Housing Australia gives the lender a limited guarantee up to 15%. So it's pretty much like the lender's mortgage insurance does.
00:03:38
Speaker
As long as you qualify for the loan, the bank's happy, you're going to be in. So for John, he'd have to borrow $665,000 with a pretty competitive interest rate. His repayment is around $3,600 per month, depending on the lender. And there are some other costs like strata fees and council rates. So let's budget, say, $800 a month.
00:03:52
Speaker
He's already paying $2,800 a month in rent. So what's the real cash flow difference between renting and owning a home? Well, it's about $1,600 extra a month out of John's bank account. But he was a good saver. He was saving about $2,500 a month.
00:04:03
Speaker
This means after he's paying his mortgage, holding costs, stride, all that sort of stuff, he can still save $900 a month. Looking at this, and obviously this isn't advice, but in John's situation, he felt there going be way better owning than continuing to rent.
00:04:14
Speaker
And remember, after you' paying all that interest to the bank, you're actually paying yourself. The payments every month your home loan are paying your equity into your art own house instead of vanishing into the landlord's pocket. If Brisbane property prices grow at even half this year's rates, he's going to be earning $30,000 in equity. His property value is going to go up just by living there.
Resilience and Growth of Australian Property Prices
00:04:31
Speaker
If this scheme it existed a year ago, John could have bought that $650,000 apartment with his But it didn't. And it exists now. Now look, I've got a civilian that's a bit of a bear and I know what you might be thinking. What if prices drop?
00:04:44
Speaker
Okay, let's talk about that because it's a legitimate fear. Could prices drop? Sure. Could they flatten? Sure. But let's look at what we actually know. Australia is short 200,000 houses right now and construction is not even close to keeping out with our growing population.
00:04:56
Speaker
The last time we had this much housing shortage was just after World War II. This is supply and demand, economics 101. When there's more demand than supply, prices go up. But fine, let's say everyone's wrong. Let's say prices tank 5% in a year.
00:05:08
Speaker
John buys at $700,000 place and it drops $665,000. Does it suck?
00:05:11
Speaker
does it suck yeah But he still owns a home, he's still building equity every month from his repayment, and he's not hemorrhaging $34,000 a year to the landlord. And fast forward to 30 years, John will not have a mortgage. It'll be fully repaid potentially faster versus 30 years if you continue renting, well, you're still be paying rent.
00:05:27
Speaker
And the reality is it's been a very long time since Australia property has had a protracted downturn.
Steps for First-Time Home Buyers
00:05:31
Speaker
The last time Australian property prices crashed and stayed down for years was the 1970s, 50 years ago. Since 1990, the worst drop was 15% in Sydney and it bounced back just a few years later.
00:05:41
Speaker
Compare that to waiting another the year, burning another $34,000 in rent, and whoops, prices jumped another 10%. right, that's enough theory. Here's what you're to and not think about what you're actually going to do. Move one, find out if you qualify for the home guarantee scheme.
00:05:53
Speaker
This is the biggest break first home buyers have got in a decade. Move two, have a chat to a mortgage broker and get pre-approved. If your ducks are in line, you've got your deposit, you're eligible, it's time to get ready and get moving.
00:06:03
Speaker
Pre-approval with a broker tells you exactly what you can afford, when the right place comes up, it means you can move quickly because that's what's happening in the current market. Properties are selling in days. Move three is run actual numbers. I've got a cost of waiting calculator in the link below.
00:06:16
Speaker
Put your rent, your savings and what you're targeting. See what waiting six months, 12 months or 18 months costs. Stop guessing, stop hoping, look at the actual math and make a decision like an adult. Look, I'm obviously a mortgage broker, you know what that means. So part of brain probably thinking, well, this guy wants me to buy and that's fine, fair.
00:06:30
Speaker
But also we tell people wait consistently. If your job is shaky, you need to wait. Thinking about moving interstate? You need to wait. Will the repayments demolish you? Well, wait. There's no rush. You haven't even been to an inspection yet?
Assessing Readiness to Buy a Home
00:06:41
Speaker
Well, wait.
00:06:42
Speaker
A mortgage you can't afford doesn't help you. But if you're a stable job, if you've done the research, if the numbers work, well, then stop asking, is it risky you to buy it? And start asking, what is it costing me to wait? Because for John, it cost him $114,000. you're ready to buy, contact me for a free assessment. We'll tell you the truth. Sometimes there's you're ready, let's go. And sometimes there's, well, we need to fix this first.
00:07:00
Speaker
Either way, you'll know. And knowing is better than lying awake at wondering if you're making a $100,000 mistake. And until next time, we'll see you later. um