5 things you need to know about first home buyers

Regardless of the time of year, the type of market you service or interest rates, people are always in the market for homes, with first home buyers (FHB) making up a large percentage of those people.

At the end of the day the more you know about Australian FHB the better. A savvy, patient and considerate agent can reap huge rewards in terms of referral and repeat business within this customer segment. 

We’ve all been there, right? When it comes to servicing FHB one of the best things to remember is how daunting it was when you bought your first home and to handle them how you would have needed and wanted to be treated.

Being knowledgable about today’s FHB mindsets, decision making processes and key motivators can help you to adjust your sales approach so that you can resonate with these buyers and effectively convert them into leads and deals.

Here’s what you need to know in order to understand and assist today’s FHB in the purchase of their first homes.

A snapshot of first home buyers today

1. They’re savvier than ever.

According to Mortgage Choice’s latest First Home Owner Survey a majority of FHB see property as a lucrative investment, with more than 55 per cent of respondents saying they bought property ‘to set themselves up financially’ for the future.

Possibly due to property prices rising steadily across most markets, they’re very switched on financially and understand that buying their first property will take a lot of research, preparation, patience and due diligence. Some other key findings from the survey included:

• 73 per cent of those surveyed said they made sacrifices to their lifestyle to save up for a deposit, with most ‘cutting back on spending’ to reach their goal.

• 60 per cent of respondents saved for their deposit for over two years to ensure they had plenty of time to review their options.

• 70 per cent of FHB surveyed knew their exact mortgage rate and how much of a rate rise they could afford before they faced financial strain.

• Buying a home is not a decision FHB take lightly, with 70 per cent of FHB saying they searched for over six months to find the right home before buying.

As FHB are so financially driven and know exactly what they can afford, to impress them make sure you’re well versed in listings that could be hidden bargains, properties that will be good prospects for resale down the track and up and coming suburbs that are future candidates for gentrification.

2. They’re cynical.

As well as being savvier than ever, today’s FHB are also cynical when it comes to buying their first home.

According to Mortgage Choice’s annual First Home Owner Survey from 2015 80.6 per cent of FHB surveyed consider housing to be ‘unaffordable’ in their state. Where FHB in New South Wales and Victoria are most pessimistic about house prices, with 86.9 per cent from NSW and 85.7 per cent from Victoria saying property was too pricey.

A majority of FHB surveyed, 54.3 per cent, in the 2014 Mortgage Choice First Home Owner Survey said they were unable to buy where they wanted to, with 88.8 per cent saying their desired area was out of their price range.

It’s unsurprising that FHB would be disillusioned about property prices where data from the Australian Bureau of Statistics (ABS) frighteningly shows the average home loan has grown almost four times faster than the average Australian full-time wage in the last two years. The average home loan size in Australia is now approximately 4.5 times larger than the average wage, where in 2013 the average loan size was 3.9 times the average wage (ABS).

Furthermore, FHB can feel as though they’re getting a raw deal because there are currently no first home buyer grants in place for those buying established properties, which is around 80 per cent of all FHB (Mortgage Choice’s First Home Owner Survey 2015).

When servicing FHB patience, compromise and understanding of the above financial pressures will be key to converting FHB leads into sales. FHB will run a mile if they feel as though they’re being pressured to spend too much in a neighbourhood they don’t even like, and they’re often more than happy to continue saving until they can afford to buy in their desired locale.

3. They typically buy later in life.

We know that the age of FHB has grown significantly over the past 30 years. Mortgage insurance provider Genworth’s 2011 survey revealed the average age of first home buyers has risen to 31, up from 25 in the 1970s.

This may be the result of them having to pay off their student loans before they could start saving for a home. It also means they are likely to be in a well established career with a reliable income by the time they buy. Some FHB may have started a family or be thinking about it in the next few years, and be looking at homes in family friendly areas with good schools. When assisting FHB make sure you talk through their specific needs and be ready to show them other types of listings than what you initially anticipated they’d be interested in.

4. Most buy as a couple.

Mortgage Choice’s First Home Owner Survey 2014 revealed that most FHB (65.6 per cent) were buying with their spouse or partner, followed by 28.6 per cent who were buying alone. Smaller minorities where considering purchasing with colleagues, siblings or family members. For single households where the one person is used to calling all the shots, they’ll be likely to have a specific type of home and features in mind. Carefully listen to what they’re looking for and only show them properties that suit their needs. Unless they express an interest in fixer-uppers, only show them move-in ready homes that require minimal work.

5. They’re strongly motivated by family and financial stability.

When asked ‘What are your key motivations behind purchasing’ in Mortgage Choice’s First Home Owner Survey 2014 respondents most commonly answered to set themselves up financially (53.3 per cent), to have a family home to raise their children (45.6 per cent) and the rising cost of rent was making owning more attractive (33.1 per cent).

When preparing a short list of properties for FHB be sure to include a list or map of amenities close to each listing (schools, parks, public transport, shops, childcare etc.) for those family minded FHB this will be a big deciding factor when choosing to buy a home.

For those financially motivated FHB it’s also a good idea to have demographic data and financial statistics (think capital growth, rental yields and 12-month growth) on the neighbourhoods you’re putting forward, to illustrate why buying there is a good investment for their future.

Landing any client is challenging, but if you take extra steps to understand the characteristics of a particular segment of buyers you’ll be able to adapt your sales process to get their business. Knowing where today’s FHB are coming from and what factors typically influence their purchase decisions is so important and will help you serve these clients thoughtfully and effectively.