Future-proof purchase: How to buy a first home you won't quickly outgrow

Property is generally considered a long-term investment, but buying a first home that you won’t quickly outgrow can be tricky.

The challenge of saving a deposit, the lack of equity in an existing property and borrowing capacities restricted by early-career salaries mean forward-thinking first-home buyers need to balance what they want in a home now with what they’ll need in the future.

Thinking ahead

Most first-home buyers understand that their purchase is a stepping stone and buy based on their current situation, says buyer’s agent Amanda Bidder-Segers.

“A first-home buyer would probably be more likely to buy something close to work,” she says. “They’ll aim for something newer that seems manageable.”

But focusing too heavily on current lifestyles can be detrimental, says buyer’s agent and Homesearch Solutions principal Henry Wilkinson.

“Young couples buy into inner-city areas wanting to be near restaurants, cafes and pubs, then they have kids and straight away the place is redundant,” he says.

“You can make a big mistake if you buy something that’s not going to suit you for long. What you’ve done is wasted your transaction costs if you’re having to sell and move to another place within a few years.”

Market conditions often influence first-home buyers’ thought processes, Wilkinson says. “If you’ve got a really strong market, they’ll try and get in as quickly as possible and perhaps have less consideration about the future. But if the market is weaker they tend to plan more.”

Affordability constraints mean inner-city first-home buyers are often restricted to smaller apartments, limiting how long a property will remain suitable as the family headcount grows.

“What you should do is imagine yourself living there not only now but with a baby,” says buyer’s agent and Cohen Handler founder Simon Cohen. “Can you get a pram up the stairs? Is it a long way to the apartment in the rain? Is there a place to play?”

Broadening the search grid can open up new possibilities, Cohen says. “If your lifestyle permits for you to live in other areas, you should definitely open yourself up for what you may be able to buy.”

Wilkinson encourages first-home buyers planning for children to think less about their current lifestyle and more about what they’ll need in the property itself.

“The best planning would be to try and get yourself a house and deal with the lack of fun,” he says.

Bidder-Segers argues a family-sized house can make for a more solid long-term investment than an apartment. “Anything on dirt is going to increase in value quicker.”

Planning to upgrade

Buyer’s agent and Propertybuyer chief executive Rich Harvey recommends first-home buyers trying to get a foot in the door think about how the property will help achieve future goals.

“You’ve got to remember, you’re not going to be in the property forever,” he says. “It’s not going to be the one you raise teenagers in, but it might be the one you have your first baby in.”

He says buyers should think about ways they can add value to a property through cosmetic renovations or extensions to make it more attractive to subsequent buyers.

“As a first-home buyer, you want to make sure the value of the equity you’re putting into the property is protected and not going to go down in a tough market.”

Taking advantage

The current low interest rate environment could allow first-home buyers to stretch further for a more permanent home, says auctioneer and Nelson Alexander director Arch Staver.

“It’s an ideal time to possibly be looking for something that is larger than they were expecting to buy. Everyone who’s been locked in isolation has realised the value of having more space,” he says.

“As long as one doesn’t overextend themselves, it’s that sweet spot in the market where they might be able to tick off a few more boxes.”

Purchasing for the future requires careful consideration, and a lack of research can defeat the purpose of purchasing a long-term home.

“Make sure that you’re familiar with the location you’re buying in,” Staver says. “If you’re going to take a long-term approach, you don’t want to buy a property you’ll fall out of love with quickly.

“Find out if this is a community you can see yourself living in for the next five or more years.”