The ideal starter home

You've finally saved enough for a deposit on your first home and you should have some idea of the type of house you can afford and the area that attracts you. Whether you are looking for a bargain, an apartment, free-standing house, a new development, or a sectional title unit, you should be aware that the property you buy will have long-term impacts on your lifestyle, your monthly budget, and your future dream of buying your forever home.

What is a starter home?

A starter home refers to an affordable property that is modestly-sized, with an agreeable price tag when compared to larger or more luxurious properties. Starter homes are characterised by:

• Amenities and size: Basic amenities include a kitchen, bathroom, lounge or social area (often a combined dining and lounge area), two bedrooms, and at least a carport.
• Neighbourhood: Often located in neighbourhoods of similar-minded people who are earning within a similar wage bracket.
• Affordability: Starter homes are priced to be affordable for individuals or families.
• Appeal: Designed to attract buyers who wish to enter the real estate market for the first time, and who likely have plans to buy bigger in the future.
• Maintenance: Generally these require little maintenance, although it does depend on the condition and age of the property.

Why starter homes may be hard to find

• Starter homes are very appealing to property investors. They are easy to rent out, and investors with cash in hand know they have the edge against buyers who require a home loan. Investors also tend to buy fixer-upper's and increase the value of the property.

• Market conditions see many more people waiting for the country's economy to recover.

• Previous low-income area's have been exposed to property upgrades, lifting them into higher priced brackets.

• Starter homes also appeal to buyers who are downsizing for financial reasons.

Buy now, or wait

The market is so volatile that waiting may seem like a good idea. Consider the following before you make a decision:

Reasons to buy now:

• If you wait it will take you longer to build up equity in the home.
• You'll spend more time in the rental market.
• Saving for a bigger deposit means you'll continue to make financial sacrifices.

Reasons to buy later:

• More time to save for a bigger deposit.
• There is less competition in higher price markets.
• More room to negotiate on your offer of a larger property than is currently affordable.

Neighbourhood considerations

It is important to buy a starter home in the best area you can afford, which also offers amenities that you need access to, such as schools, hospitals, main thoroughfares and transport, and your leisure activities. Other considerations when looking at neighbourhoods include:

• Rates or levies: These vary from suburb to suburb, complex-to-complex.
• Noise levels: Starter homes tend to be in close proximity to neighbours, who may have excessively barking dogs, or like to amp up their music volume.
• Border suburb: You may not be able to afford to live in one suburb, but if able to find a property that borders it, rates may be less.

Monthly cost considerations

This most important purchase decision must be made according to your monthly costs. You will need to pay for insurance, rates and energy/water usage, refuse removal, and possibly light maintenance. Be sure to factor these items into your decision-making and adjust expectations accordingly. It is recommended that you seek and engage the services of an estate agent, who has experience in finding starter homes.