First timers vs CUBB’s – who wins? – Miriam Sandkuhler

First timers vs CUBB’s – who wins? – Miriam Sandkuhler

How tough is it really for first time buyers?  Super low interest rates, generous grants and developer incentives, help from the bank of Mum and Dad funded by well off Baby Boomers and so on.  Miriam Sandkuhler says it is tough and she explains how she sees it and has some helpful advice for anyone struggling to get into the market.


Kevin:  Nothing like a discussion about the housing market, affordability, and how difficult it can be for first-time buyers to get into the market. We’ve heard lots of reports from, say, auctioneers who continually tell us that first-home buyers are being outbid not only by overseas buyers but by cashed-up baby boomers, who are now known as CUBBs. I’d never heard that word before, but anyway, Miriam Sandkuhler from Property Mavens joins me.

Good morning. How are you, Miriam?

Miriam:  I’m fine, thank you, Kevin.

Kevin:  Yes, good to be connected. Did you invent that term, CUBBs?

Miriam:  I did.

Kevin:  Well done. That’s why I hadn’t heard of it before.

Miriam:  There you go.

Kevin:  Cashed up-baby boomers.

I’m just wondering if this is just another excuse for people who are saying “We can’t get into the market; it’s too tough.”

Miriam:  It’s not so much an excuse; it’s actually a reality of where the market is at. Certainly, with all the APRA changes, we’ve seen a reduction in the number of investors, but we’ve seen an increase in the number of first-home buyers qualifying for money. And that has the contrast of competing with the CUBBs in the marketplace, a lot of whom are heading towards retirement and they’re wanting to downsize and buy things that are smaller and more manageable.

Kevin:  That was going to be my next question: what are baby boomers buying? Are they buying a principal place of residence, or are they investing in a property as an investment?

Miriam:  Some of them are doing a combination. With the downsizers, they’re often doing a combo, so they might do a CBD and sea change, or they might do a CBD and tree change, or they might do their own suburb and stay within that suburb and then buy a second property, which is either an investment or a bit of a holiday home.

Having said that, in both instances, they’re looking to buy something smaller, low maintenance, secure, set and forget.

Kevin:  Is that the sort of property, then, that first-home buyers would be buying? Because my impression is that they’re going to some of the newer areas where they can start a family.

Miriam:  Certainly, first-home buyers who are going into those outer areas where they might have a longer commute time but they have a bigger property where they can have a bigger block of land and a family home, they’re not necessarily competing directly with down-sizers, because a lot of these are new housing-and-land estates.

Where the toughest competition is is within proximity to the CBD. Anyone who wants that 15-kilometer or less lifestyle and close to the amenities that the CBD offers, that’s where there’s a really strong push, particularly in the Melbourne market at the moment.

Kevin:  They may have to adjust to that reality and go where they can buy. Rentvesting is another opportunity for them – rent where they want to live and invest somewhere in a property. Surely, that’s a solution for them, too.

Miriam:  Absolutely, that’s still a solution, but a lot of them are still in that first-home buyer price bracket even if they’re rentvesting. So, while it’s a different strategy on what they can do with their money, if they can’t buy the home they want in the area they want, if they’re still under that $750,000 price point, we have bottom-up pressure with first-home buyers up to $750,000 and we have top-down pressure from down-sizers and CUBBs under that $1 million mark. And that’s where the two are clashing in the middle.

Kevin:  What about baby boomers who are actually helping their kids get into property? If they’re so cashed-up, are they able to do that?

Miriam:  Some are, if they have the capacity to, but again, with the lending side of things, banks are looking quite sternly at borrowers who’ve been gifted money and don’t necessarily have a steady evidence of saving.

Kevin:  It’s more about a savings record, isn’t it?

Miriam:  Yes, that’s right. If they don’t have a steady savings record, then they’re not necessarily open to the fact that mom and dad are just going to hand over some money. It could be that mom and dad have to take the loan out and put their name on the loan, as well.

Kevin:  What are the tips for young buyers wanting to get into the market if they want to compete? If they find they’re going to an auction and they’re bidding against a CUBB, what do they do?

Miriam:  They really do need to understand and be able to price property and know what the property values are.

The first thing I’d say before they even get to that is don’t procrastinate and hope the market is going to slow down, because it probably won’t. First and foremost, get your loan approval in place because cash is king. If you can’t get a loan approval, you’re wasting your time even looking at the market.

Make sure you’re clear on your buying strategy, what you want to buy where and what your negotiables and non-negotiables are, and where you’re flexible to get the outcome and the property that you want, which is going to serve your needs for maybe the next 10 or 15 years from a home perspective or a family perspective.

And most importantly, develop a really clear buying and bidding strategy. That includes knowing who your competition is at auction, getting a sense of whether or not the property is being under-quoted or whether or not it’s a fair market value. And in reality, this is very complex. The average person, if they’re buying a property for the first time, seriously doesn’t know how to do this.

So, the best thing is to engage a professional – like a licensed buyer’s agent – to help you. It might just be the bidding side of it, it might be helping you find the property and everything in-between. People lose and waste a lot of time missing out on properties time and time again, and often it would have been cheaper if they had just engaged a professional buyer’s agent to help them.

Kevin:  Always good talking to you. Miriam Sandkulher is from Property Mavens. Thank you very much for your time.

Miriam:  Thanks, Kevin.

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