Buying a first home as a couple can be a tough task in many parts of Australia. It can be even harder when single. But many young Aussies who are right now flying solo have no wish to wait until they meet Mr or Mrs Right before buying. There can be many reasons for this.
Some Aussies want to get their foot on the property ladder ASAP. Others feel buying now would make the most sense for their personal financial goals. And some may have gotten a promotion that skyrocketed their income, or a windfall that they want to use right away. Whatever the case, there’s a lot to be said for buying a first home when single, but there’s challenges too.
So let’s look now at the pros and cons of being a first home buyer while single.
Pro: It Can Be a Great Move Financially
As a general rule, the sooner you can buy your first home the better. There’s no need to sprint to auctions like Usain Bolt doing 100m, but there’s many factors that make ‘sooner rather than later’ the best course of action.
After all, at the end of the first year of the Bachelor Australia’s premiere in 2013 the median house price in Sydney was $722,718. At the end of 2017, after its forth season ended with Sophie choosing Stu, anyone choosing to buy a home in Sydney needed to confront a media home price of $1,179,519.
Across many markets home prices in Australia have been rising for many years. Recent months have seen well-documented price drips across Melboune, Sydney, and Brisbane, , but anyone waiting to pick up a flat in Bondi for $1000 will be waiting a loonnnnng time.
While house prices keep going up, unfortunately wage growth has generally not kept up. This means the gap between average earnings and the price of a home is only set to grow further.
Buying your own home is a great way to put the brakes on this, and buy a property now you have a deposit for now, and could meet the repayments on comfortably (something that could becom harder and harder into the future if prices do keep rising). It also means once you’re a home owner you can surf the wave of rising home prices, so maybe one day you can resell your first home at a profit, and then use that profit to buy into a property you like even more. If you don’t buy a place now there’s no chance to do this.
Con: Your Borrowing Capacity May Be Less
Generally speaking, your borrowing capacity will be lower when you borrow by yourself. If you’re on a really high income, this may not be an issue, as you’ll likely still be able to borrow enough to easily get over the line, and into your first home.
But if you’re looking to something around or over $500,000, and you earn an average salary, you may find your borrowing capacity by yourself is below that.
There’s actually a fair bit of debate around now about what exactly the average Australian wage is these days – news earlier in the year the average Aussies wage was around $84,000 was a bit of a showstopper! – and it’s since been shown that figure is pretty damn flaky.
But either way, if you’re sub $80,000, and earning a respectable $50,000, $60,000, or $70,000, you may struggle to borrow over $500,000.By no means does knock out a ton of great homes still being available at a lower price point.
But if you’re maybe planning to ‘put the wagon before the horse’ and buy a family home in anticipation of meeting someone in years ahead? It may be necessary to step back and reassess your options.
Especially because alongside a smaller borrowing capacity, there’s the deposit factor. Ideally to get a loan lenders like to see 20% of the total home value saved. For a $500,000 property that’s $100,000! You can get a loan with a smaller percentage, but then other things like lender’s mortgage insurance may kick in.
And as a result of the revelations from the Royal Comission into Financial Services, the era of free wheeling lending is indeed over, and it’s possible it may tighten further.
Pro: Aiming for Your Goal Can Be Easier
Buying a first home when your single can get you access to a range of benefits. Across Australia first home buyers commonly get a reduction in costs like stamp duty and transfer fees via their state or territory government.
If your the Bachelor’s current star Nick Cummings and already cashed up from your pro rugby days, you may not be eligible for these discounts if you’re buying a home closer to $1 million (or more). But if are around the $500,000 or sub-$500,000 mark, there’s usually a number of special incentives offered by your state or territory government.
You can miss out on these when buying with a partner. Obviously two people buying a home – especially with a view to having kids down the line – will often seek to maximise the square footage they can get, and this usually comes with a greater cost, seeing you go over the discounts threshold.
This dynamic also applies to saving for a home. While if you save alongside a partner you should be able to build a big deposit faster, it can also be a big adjustment to get two people’s budget synced up and in ‘deposit saving mode’.
When your saving as a single it can be easier. As if you’ve prepared to nix the gym membership or kiss goodbye to the annual holiday, it’s an easy do. If you’re saving alongside a partner, you may fix they are not at all willing to give up the treadmill or that annual trip to Vanuatu.
Con: Property Ownership Always Requires Long-Term Planning
When you buy a home with someone it’s a pretty clear indication of a deep commitment. Even if they’re not yet married or don’t have kids together, couples who buy a home send a pretty clear signal to the world (and each other!) that their building a future with one another. It also means they prioritise security with each over individual flexibility, as that’s what being a couple is about.
Single people buy a home without needing to be decided about who they may want to partner with, or the potential of having kids. While this in theory means there’s more flexibility, in practice buying a first home when single can make life trickier. Sure, you can move somewhere else and rent out your existing home, but this can bring financial complications and more costs.
Then there’s also the time factor. For someone who falls in love with another city, or with someone who lives further afield – or both! – then owning a property in Perth while your heart’s in Brisbane can complicate things. You can get a property manager to handle your home while you live elsewhere, but as a property owner you’ll still need to deal with paperwork pretty regularly.
Nobody is saying you can’t buy a home and manage it as a single person. It’s just also important to really recognise buying a property anytime is a significant undertaking. Even if you do decide in a year’s time it’s not for you and you want to sell up, you’re still going to be looking at a lot of big new expenses like marketing, conveyancing, and auctioneer’s fees.
Pro: Can Make It Easier When the Time Comes
Once things get serious with a partner it can often require moving home. You may have had some great times in your uni share house with your mates but you know your partner and you will struggle to have a romantic dinner with Davo and Macca play Fortnite, or while Suze and Beck binge watch Black Mirror.
If you do have your own home and meet someone special, as things progress it can be way easier to transition to living together, instead of having to look for a new place together.
Sure, you may have to clear out a cupboard of all your old hobby gear to make room for their clothes – seriously you can always buy another pair of roller blades if you get that 90’s feeling again – but otherwise it can be pretty quick and easy to make a move from single to couple when you have your own home.
And also – while this isn’t fun to raise – if you ultimately have your partner move in but then find after a few months it’s going to be a Sam Frost and Sasha situation and not work out? Then you can go your seperate ways but still own your property without needing go through the difficulty of moving home alongside dealing with a breakup. This scenario can obviously be really complicated and is never great to encounter, but it is actually another reason why it’s wise to buy now.
Sure you can wait until you meet Mr or Mrs Right before you hit the next milestone of buying a home, but then sometimes it may not be the right (even if you stay together and are 100% happy as a couple) for both of you to buy a home right now.
So if you are keen to buy a home now you shouldn’t feel you need to wait until the stars align elsewhere in your life with a relationship. You can buy a home now, and when the time comes you can ensure their stars align with you!
Con: Extra Financial Pressure
As well as less short-term flexibility, there’s also the financial pressure of being a homeowner by yourself. Even if you’ve budgeted and purchased carefully so mortgage stress is at a minimum, it can still be pretty confronting to look at the balance sheet on your home loan and recognise it’s ultimately up to you alone (right now) to pay it back.
Many people will find that challenge inspiring instead of daunting. After all, these the confident young go-getters who happily brought a home by themselves! But it can add some extra worry if you find yourself playing the ‘what if’ game and think ‘what if I lost my job?’ or ‘what if I got really sick and couldn’t work for a while?’.
Even if you are partnered with someone, a really big life event like losing your job can still add some big stress to the mix. But when you own your home with someone else, it can be a little easier know there’s some backup right there to help you press on.
Going, Going, Gone!
Overall, buying a home when you are single can be a fantastic move. It can give you a foothold in the property market, held you advance your financial goals faster, and also give you a greater confidence if seeking to meet someone special, that yes you’ve got your act together, and you’re ready to share your life with someone.
It’s just also important to keep in mind there can be a couple of extra challenges when it comes to buying a home solo. Especially because most of the home loan coverage we see in the day by day of media is geared towards a couple buying a home.
So it’s good to allow for a little extra time if keen to buy a home just so you can sort some of the extra considerations, and ensure your first home plan ticks all the boxes. Once that is done though? It should be clear sailing ahead.
All you need to do next is arrange a loan via Hero Broker!