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Location - buying first home
How much does it matter?


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#1 greenthumbs

Posted 27 January 2013 - 07:01 AM

OK, so everyone says location location location when buying. But how much does this matter?

We are looking to buy our first home and having trouble with the decision of where to look. There is the two of us, plus toddler DS (and plans for one or two more in the next few years). I'm a gardener and DS loves being outside too. We are both in positions that we love, with little chance of earning much more other than normal inflation/award pay rises. I do only work 3 days which will probably change as children get to school age (though obviously a long time away).

We are currently renting in a lovely area which we really like. But if we were to try and buy in this vicinity we would only be able to afford a small home on a very small block. We would need to spend almost to the top of our borrowing capacity and therefore would have no money left in the near future for alterations/add ons etc. The main thing I like about the area is that we would be close to the freeway and town centre.

If we were to travel 5-15 mins north, we would likely be able to afford a much nicer bigger home on a larger block. We could likely spend 40-50k less for a similar property, or go higher up in our borrowing capacity and get something with 4 or even 5 bed, 2 bath, larger all round, but don't really know the area, further from town centre (10-15mins depending on traffic) and really only 1 main arterial road in and out which is what would cause traffic. These two areas are surrounding the same town centre, we'd just be 5-10 mins on the opposite side of town.

It just seems silly to go with spending so much more for a similar feeling area close to the the freeway for only a 10minute travel difference. But having been used to being so close the town centre for so many years I wonder how much it would annoy us. DP doesn't seem worried either way. We are essentially home bodies, but see DP's family a lot and this would make us that bit further away - they are currently a 25min drive, then they would be 35-40mins away. I need to get to the freeway for work, but DP goes to train station so does affect him as much.

The closer one is considered a better area, hence prices. The other is considered a lower socio economic area (well the whole area is considered this, it's western sydney tongue.gif ), but when looking at places we go on the feel of that particular street/area and house.

Once we're home it wouldn't bother us where we are, it's just the travel that's concerning me. I know it's only 10mins, but.... it's having that one main arterial road.... and just not knowing the area as well.

Any advice? Anyone faced similar decision?

#2 CupOfCoffee

Posted 27 January 2013 - 07:11 AM

We are facing the same problem.  We are looking to buy our first home and if we stay where we are renting we will have to get a dodgy little home that needs work (and neither of us have skill in that area).

But if I move to a different area, further out and in worse suburb, I can get a massive renovated Queenslander (we are in Queensland) for well under our budget.

My preference is to move into a lovely house, I am not looking for an investment, I am looking for somewhere to live.  Everyone is telling me that location matters and I should look to buy in the suburb I live in.  So I am in the exact same position, without an answer.

#3 Stellajoy

Posted 27 January 2013 - 07:14 AM

I would spend more and buy small house in the area you like close to transport.

10 extra mins commute is 20 minutes a day, so an hour a week extra for you and 1 hr 40 for your DH.

So 2hrs a week, over a year is 104 hrs which is like 13 working days you and your DH will spend extra commuting.

That's just me though.

#4 jobo77

Posted 27 January 2013 - 07:16 AM

I would look at school zoning too- you might find that the cheaper area also has a big difference in the public school offered. We are in north western Sydney and could get a bigger house if we were to go probably 15 mins over a main road but we would never do it due to the difference in schools and neighbourhood. I grew up out here but I am still a snob wink.gif

#5 FeralMuddyPuddles

Posted 27 January 2013 - 07:16 AM

We bought our first home in an area that we didn't love, because we could afford it, it was still close to the city, and we then had money to renovate and improve the home. We then sold it 2 yrs later as the area had started to really go up in price and we'd finished the renos ad we made a great profit, which then allowed us to buy where we wanted to. Sure the first area wasn't as lovely, but it served its purpose to get us elsewhere in a few years. We also had a lovely street and neighbouring houses which helped the decision. Slightly different scenario to yours, but for us it was about a longer term goal whilst still being able to buy immediately. We have no regrets and at least now never have to live in an area we don't love ever again!

#6 wannabe30

Posted 27 January 2013 - 07:17 AM

For me, once I'm in the car, the difference between 5 min travel and 15 min travel is irrelevant. If you we're used to walking to the town centre, then the change to having to drive to the town centre would be very noticeable, however 10 min extra drive is no different, especially if you like the other area just as much.

Edited by wannabe30, 27 January 2013 - 07:19 AM.


#7 Duck-o-lah

Posted 27 January 2013 - 07:22 AM

That sort of time difference in travelling would mean absolutely nothing to me it wouldn't even factor into my decision.

I would spend as much time as you could in the new area and try and get a feel for it. Great suggestion by PP to check out the local schools.

Personally I would do everything in my power to avoid borrowing at the top end of my borrowing capacity. Financial stress is a horrible, horrible thing. Make sure you would still have enough money to get by if one of you had a loss of income, even if only temporary.

#8 I'm Batman

Posted 27 January 2013 - 07:26 AM

10 mins? Seriously?

Phhhhtt Where I live the average commute is 1.5 hours plus. Its half an hour to the nearest coles.

If you are in a car I say meh

#9 Pearson

Posted 27 January 2013 - 07:45 AM

Our first home - we bought small in our area we liked. 2 years later, we bought a new house a little further out, bigger, on a good size piece of land, 10 mins away.  We then had trouble selling our first place.

The cost alone of selling etc is ridiculous. My advice - buy a little further out.

Ps - we were "poo poo'd" for buying our house where we bought it, but, we have bought below our max borrowing power, and the houses we could have afforded all got flooded in 2011. It too is in a lower socio economic area.

#10 axiomae

Posted 27 January 2013 - 08:03 AM

I moved from inner city Brisbane to Ipswich (a 30min drive away and whole other town that people in Brisbane snob their noses at, despite it being quite lovely) in order to afford a house that I could comfortably live in.

People said DP and I were crazy, however we have made so much capital growth due to increases in the area and have actually come to love our new town, without topping out our borrowing capacity. This has made a massive difference considering my maternity leave and the cost of having a family these days. Don't push your borrowing capacity and be stuck with a house you can't afford should there be a change in your circumstances (illness, redundancy etc) would be my advice.



#11 CupOfCoffee

Posted 27 January 2013 - 08:07 AM

QUOTE (axiomae @ 27/01/2013, 08:03 AM) <{POST_SNAPBACK}>
I moved from inner city Brisbane to Ipswich (a 30min drive away and whole other town that people in Brisbane snob their noses at, despite it being quite lovely) in order to afford a house that I could comfortably live in.


That is the exact move we are thinking of doing.  The Ipswich area has some of the most amazing homes.

#12 Smoo

Posted 27 January 2013 - 08:17 AM

it really depends on the area, we moved further out and I actually prefer it to quite a lot of the inner areas but that's personal preference and the schools in the area are supposed to be quite good.

Before buying we did rent where we were looking at that let us figure out a lot more. We didn't end up buying where we rented but discovered the area that we did buy in from living near by

#13 Charlies Angel

Posted 27 January 2013 - 08:22 AM

Make sure that you check out potential areas during the morning peak. If there is only one arterial out, you might find traffic backed up for kms.

With a young family, I would lean towards the cheaper options in general though. It will give you more flexibility in the years ahead. Interest rates are also very very low which can give people a false sense of what is affordable.

#14 jibsi

Posted 27 January 2013 - 08:28 AM

From experience with this, I would buy the more suitable family home in the area slightly further out. I never thought I would have said this before kids, but the reality is you spend so much time at home with kids, it helps a lot to have the right house.

I have friends who bought a small house due to location and they really regret it.... It just doesn't meet their needs and they can't afford to spend anything to make it more liveable for a family. They feel they can never have friends over (because there is nowhere for the kids to play outside or inside etc). It does effect their lifestyle significantly so consider your options carefully. As a PP said the cost of moving and selling is very expensive so go with the bigger house, 10 mins extra travel will be worth it I reckon!

#15 SeaPrincess

Posted 27 January 2013 - 08:29 AM

10 mins isnt much.  I would be checking things like schools and crime statistics for both areas though..

#16 baddmammajamma

Posted 27 January 2013 - 08:29 AM

I'd be looking at the local schools first and foremost (unless you've already decided to go private).

#17 axiomae

Posted 27 January 2013 - 08:32 AM

CupOfCoffee - its worth it! I knew nothing about Ipswich before moving here, apart from the general Brisbane prejudice that is. On the whole, we love living here. There are some gorgeous and affordable houses, great family friendly parks (one with a free native zoo!), and a lovely burgeoning CBD with some good food and coffee. I also love that everything you could need (I mean supermarkets, spotlight, bunnings, generally all major retailers) is less than 10mins away, and no hassles parking, woo!

There are a few dodgy areas, but buy in one of the nice suburbs and enjoy a lovely house. We've got so much more 'bang for our buck' than we would have in Brisbane.

#18 Kalota

Posted 27 January 2013 - 08:33 AM

For me, location was the #1 thing we took into consideration first when we bought our first home. Why? Because you basically pay for the land value, not for the house. If you find a cheap house in a poorer location (so to speak; poorer as in not as good; not as many schools or amenities) the reason it is cheaper is because the land is worth less. Consequently, because the land is worth less, it will not appreciate in value as much.

However, DF and I were in the same situation because we could only afford a tiny flat in the area we were renting in, close to the city. So we did buy further out, but we researched what areas further out were great growth areas. We then made sure we bought a house close to all local amenities, in a good street, etc original.gif So yes, location does matter hugely but you also need to compromise so that you can afford it. If you need to by further out or in a different area, look for an area that still has local amenities.

Good luck!

Edited by Kalota, 27 January 2013 - 03:49 PM.


#19 ekbaby

Posted 27 January 2013 - 08:53 AM

Location matters, but so does affordability. I'd definitely shy away from anything that means you will be stretched to the limit with your budget.

Also location matters in terms of more than just proximity to the CBD- it includes things like- are you close to public transport? If it is a commuter suburb, how far from the main road? (getting a balance between close enough to make the trip quick, and far enough away that you don't have pollution and traffic noise). Proximity to schools/type of schools. Proximity to local shops, amenities like parks, swimming pool, bushland reserve. Views. Those kinds of things too. Then you have the size of the block and the orientation, and how usable the land is (sloping etc)- these are all things you can't change once you buy the place. So I think the saying about "location" means to consider all of these things, but doesn't always mean that proximity to CBD will win out over everything (especially if the price is not affordable for you).

How long do you plan to live in this place? If it is a "stepping stone" to something else in the next 10 yrs or so, keeping resale value/growth in mind is important. If it's looking more like a longer term/forever home for you, less so- it's more important to get what you are happy with.

I guess the main thing to be aware of is over-capitalising- if you buy a newly renovated, top notch home, that takes up most of the block, in an area which doesn't have much prospect for growth, then you are unlikely to make much money when you do sell the place, and might even make a loss (depending on the market).

If you go for the smaller house on the bigger block, once you have paid off some of the mortgage and increase your days at work, you might have the money to make some small improvements to it that would add value (and have the room to do so).

#20 mumto3princesses

Posted 27 January 2013 - 09:00 AM

The schools woulld be my priorty. Where they go to school especially high school really can make a huge difference.

If the schools seem similar then I would have no problem with something 10-15mins away. But if there is a big difference in the schools and the ones closer are better then I would stay closer.

DH walks to the train station and catches 2 trains to work. It takes him about 1 hour 30 mins each way. But he is fine with that if it means our girls are zoned for the high schools in our area that have an excellent reputation. (Its middle school years 7-10 and senior campus years 11-12) Its very very hard to get into unless you are zoned for it.

#21 Freddie'sMum

Posted 27 January 2013 - 04:42 PM

Location.

When DH & I bought our very first property (after years of renting in Sydney) we bought the worst unit in the best location.

We lived in said unit for nearly 5 years - by which stage we had had DD#2 - she was about 3 or 4 and DD#1 had started Kindy.  

We cracked it because unit was too small (2 bedrooms / no outside / no balcony / shared bathroom and laundry - just too small for 4 people and 1 cat) - so we sold unit and bought 3 bedroom townhouse - in a different location.

The location we were in - lower north shore, Sydney - was beautiful but we couldn't afford to make the step up into a 3 bedroom townhouse where we were - so moved further out.

We got good capital growth in the time we were in the unit - and used this to put towards the 3 bedroom townhouse.

Are you planning for this purchase to be long term or short term ??  In terms of commute - sorry, I nearly laughed when you said it was an extra 15 minutes.  As one of the other PPs said - honestly - we travel an extra hour (or more) to get to and from work - so 15 minutes is neither here nor there.

Work out how much money you can actually afford to borrow - sit down and work out your costs - what they will actually be - not what you hope they will be (if that makes sense).





#22 BetteBoop

Posted 27 January 2013 - 04:58 PM

OP, I think the most sensible rules with property are: 1. do not over extend yourself and 2. buy a house you can see yourself living in for a long time.

Don't buy a house at the top of your budget so that you'll experience financial stress if interest rates rise. Don't buy a house thinking of it as a stepping stone to a better house. The cost to buy and sell as house is up to $50 000. That's a massive waste of money so it's best to buy and sell as few times as possible.

I would go for the second option of a house you like in an area that's okay - but only if you can see yourselves staying there for years. As a PP said, consider the schools in your area.

QUOTE (CupOfCoffee @ 27/01/2013, 08:07 AM) <{POST_SNAPBACK}>
That is the exact move we are thinking of doing.  The Ipswich area has some of the most amazing homes.


I love Ippy. Most of my mum's group has relocated out there and they have decent homes with big blocks of land.

I think it's a go ahead city too and that prejudice will go.

#23 josh2003

Posted 28 January 2013 - 08:33 AM

We're in Melbourne, so slightly different, but this was our experience. When we started looking to purchase our first home in 2000, we were tossing up between an old period house in a great suburb (closer to city), and a 4brm house in a newer suburb that was "only 10-15 minutes" further out.

We unfortunately listened to the wrong family member at the time and bought the house further out for $212k. The other house was $240k.

Fast forward 4 years, the extra 10-15 minutes turned out to be more like an extra 40 minutes in peak hour each way, not to mention the extra $$$ on petrol, we decided to sell. It never really felt like home to us anyway, as even though there were some really nice families in the area, there were also heaps of hoons and not great people.

So, after having spent around $40k on improvements on the house, we sold for $307k, which over 4 years, was good gain for the area, but not compared to the rest of Melbourne. Funnily enough, the other house we considered buying also sold around the same time and the people that bought it had spent around $150k on an extension, and it sold for for $880k!

After we sold, we rented for a short period, before buying a house neighbouring the original good suburb (we can't actually afford that suburb now!), and had to basically start again in an old 10sq house, with 2 kids now, so pretty squishy! But we've just added 16 squares and it is basically our dream home in almost our dream location. But had we made a different decision at the very beginning, we would have been much better off than we are now, financially speaking.

Having said all that, things were different then... it was the middle of the boom and prices were much lower to begin with. Just bear in mind though that the extra commute is not just a time cost, it's also a financial cost, especially with the price of petrol these days. So you may be better off in the long run putting that petrol cost towards a slightly higher mortgage and buy in a better location with better growth potential.

ETA - I said wrong family member because we were getting advice from people in my husband's family, and none of them have made good real estate decisions, where as my much older siblings have all managed to buy in the right areas, and are all sitting on 2-3 properties each that are fully paid off. Even my sister who was a single mum has 3 properties in inner sought after suburbs.

Edited by josh2003, 28 January 2013 - 08:37 AM.


#24 MrsLexiK

Posted 28 January 2013 - 08:38 AM

Depends on what you mean by location, if it is a matter of 10 minutes but a good suburb still wouldn't phase me. If it is 10 minutes and a crap suburb the land value is likely never to make as much return as the other place.

#25 BellaMoja

Posted 28 January 2013 - 09:12 AM

Schools and neighbourhood/crime would be my number 1 consideration for my child's future.




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