The human desire for more is both our bane and our benefit. As soon as we strive for one thing and achieve it, we are immediately looking for the next big goal. No resting on our laurels allowed it seems, and this has certainly pushed us towards great things over the lifetime of the species.
However, it can sometimes be hard to know exactly when the right time is to move on from what you’ve already accomplished. Your first home is a big step forward for your finances and your family, but just how long should you hold onto that property before deciding to move on to the next piece of real estate?
This answer will be different for everybody, so let’s take a look at a few considerations you’ll need to make.
Will you sell at a gain?
One of the things that people often forget about their first home is that it is also an investment – you don’t need a rental property to make money out of real estate! Simply by taking out your first home loan and buying into a piece of New South Wales, you are taking advantage of the massive equity gains that have been sweeping the state for the last few years.
However, good things take time, and the same can be said for your first property. The CoreLogic RP Data Pain and Gain report for the March quarter demonstrates this perfectly. The average time a capital city property was held before it was sold at a profit was about 10 years. Those sold at a loss averaged out at about five years.
This is why it is so important to plan ahead when you are buying your first home: Always make sure that it is likely to suit your needs for at least the next decade if you want to make the most of it.
Are you buying in the right area?
There are plenty of reasons that people decide to move. They want to be closer to work in the city, have decided to head to the country or they want to have kids and a good suburb to raise them in. Young Australians still want to have children after all, even if Australian Bureau of Statistics data shows they are choosing to leave it a little later in life.
These factors and your choice to move out of your first home will be at the front of your mind, and will help dictate where you choose to purchase your next home. But the key here is to remember that you still want your new home to help build your finances.
When you bought your first piece of real estate, you were probably limited a fair bit by the amount of financing you could acquire. Now that you are a little more experienced, the world can seem like your oyster, but it’s still best to spread your net wide just like you did the first time. The regions of New South Wales are quickly becoming some of the most sought-after pieces of property in Australia according to CoreLogic, and by buying your next home in these areas, you can take advantage of that and keep the momentum going.
Your first home should never be thought of as your last home, but leaving it can be a seriously emotional affair. However, by taking this next step with the right amount of research and advice, you can take your initial successes and put them towards a comfortable retirement further down the line.
If you need help with your home loan financing, make sure you get in touch with the team at Police Bank!