First-home buyers are being saddled with $6300 in ‘hidden’ costs due to rising housing market
First-home buyers Kim Nguyen and Arnie Brabbs said their search for a home is getting expensive because they keep missing out. Picture: Toby Zerna
Frustrated first-home buyers are being lumped with thousands in hidden purchasing costs after already stretching their budgets to land a foot on the property ladder, a new study has found.
While most first-time buyers anticipated they will be up for stamp duty and home lenders’ insurance — if they don’t have a huge deposit — online comparison site Finder.com.au revealed more than half of first-time purchasers paid an average of $6353 in unanticipated expenses.
The issue is first-time buyers are being repeatedly outbid for properties in the booming market, the research found.
MORE: Home sellers get $500k more than neighbours last year
Knockdown sells almost $1m over reserve
It means they are paying for multiple building and inspections for properties they didn’t purchase, along with other unanticipated fees such as solicitor charges for reviewing contracts.
Finder home loans expert Sarah Megginson said first-home buyers were discovering unexpected fees and expenses could pile up quickly.
“Paying for government charges, lender fees and other moving costs can easily stack up,” she said, adding some buyers were paying up to $20,000 in unexpected costs.
Many first-home buyers didn’t take into account professional advice, house hunting travel costs and property reports, Ms Megginson said.
First-time buyers Kim Nguyen and partner Arnie Brabbs said they were getting frustrated with the extra expenses of house hunting. The couple have looked at 90 homes since September 2020 and have yet to buy.
“There were five homes that we’ve been very interested in so we did building and pest checks on them. Some of the homes or duplexes were brand new too, so those contracts are a bit more expensive to review,” Ms Nguyen said.
Housing estate Fairwater in Blacktown, which has become one of the most popular suburbs for first-time buyers in Sydney.
“Then there are those homes that you’re quite interested in and you decide to get a contract review done and they can vary between $100 to $150.
“So those are the types of costs we’re facing, and we still haven’t secured a home. I feel like this could just go on forever.”
Veronica Morgan, buyer’s agent and co-host of the First Home Buyer Guide podcast, said many uninitiated buyers were surprised where their money went.
“That’s the biggest hidden cost — spending money on homes you’re not going to buy rather than the home that you will,” she said.
Property expert Veronica Morgan said buyers don’t know how determine price.
“In a rising market like this one, the problem is many first-home buyers have no idea how to properly gauge price. Many are bright-eyed and bushy-tailed and take on face value what the selling agent says and think they’re in with a chance,” she said.
Ms Morgan said this raised the danger of first-home buyers cutting corners, she added.
“The temptation is there that these things don’t matter, it just about getting into the market. But they will matter if something goes wrong, and they will matter when the market slows down — and it will slow down, it always does.
“If you’re stuck with something that you shouldn’t have bought, when prices slow down, you will regret it.”