Where can first-time buyers find value?

first time buyersBuying a property is a key moment in many people's lives. The excitement of purchasing your own home is enormous and the feeling of walking through your own front door for the first time very satisfying indeed.

In reality, you may not be walking into your dream property as a first-time buyer. Unless you have a lot of money it is more likely you will be buying the best place you can find within your budget, with the intention of moving on to something bigger and better one day.

But is there any way that you can make your initial homebuying budget work harder for you? And is it possible to get more value for money as a first-time buyer by choosing specific types of properties or locations?

If you are willing to think outside the box you might be able to get more for your money.

1. Auction properties
Homes under the hammer are certainly an exciting way to get onto the housing ladder and you can definitely pick up a bargain, with many first-time buyers and property investors bagging properties for well under market value.

If everything goes your way on the day, and there isn't much competition in the auction house, you could be very lucky indeed. But proceed with caution, as you officially exchange contracts on the fall of the gavel and are financially committed to the deal – usually to the tune of 10% of the agreed price.

This means you should do any investigations on the property before you bid – even though this requires a financial outlay on a house you may be outbid on. Pay for a surveyor to check out the property (assuming you can gain access) and ensure you get hold of the legal pack and get a solicitor to check it first. It is essential you know what you are buying.

If you are confident that you want the place you could end up getting a lot more for your money than on the open market. But remember, if a property is that good, you could have some competition on auction day!

2. Up and coming areas
Buying your first home in an up and coming area is a bit like winning the property jackpot. You get a decent place for a modest sum, and over the next few years the surrounding neighbourhood improves, boosting property prices and making it much more desirable to buyers.

Of course, the problem is spotting an up and coming area before it has already become popular – and in reality that means taking a gamble, because it is hard to know which places will improve.

Some good indicators are decent transport links and a busy high street – even if it is a bit rough around the edges, it's encouraging to see a community using its shops.

And of course, a small but growing community of twenty-somethings and young families priced out of posher areas can be a good guide. The presence of a couple of independent cafes, perhaps an art collective, a smattering of baby massage classes and a farmers' market are also decent clues to postcodes that are becoming gentrified.

Wendy Ravenscroft, sales manager at John Mellor estate agency in Heaton Moor, Stockport, says: "Up and coming areas tend to be in the next postcode to places that are already desirable. For example, in Manchester Whalley Range has benefitted from being next to trendy Chorlton, with a knock-on effect on house prices."

3. A 'do-er upper' home
A good alternative to finding a cheap area with potential is finding a cheap property that you can pick up for a modest sum before transforming it into a dream home.

These 'do-er upper' homes are getting harder to find, probably due the proliferation of programmes aimed at novice developers and the unwavering obsession we have with property in general.

They are sometimes the properties of people who have passed away and are now being sold by their estate, so a deal will often be done by the family members to hurry things along.

And if the property needs modernising, or more substantial work, a lot of other buyers, particularly families, will be put off.

But however appealing 'do-er upper' homes may be they aren't always easy to get your hands on, warns Ravenscroft: "It can be hard for first-time buyers to get hold of properties that need significant work, especially if they need to borrow a large proportion of the property's value, as the lender may not take into account the potential value of the refurbished property.

"These do-er upper houses are often snapped up by cash buyers, in particular experienced developers."

4. Homes with space to extend
As well as buying homes with the potential to improve, looking for properties with space to extend is also a great way to get value for money, and add value. They may not necessarily command a huge premium now, but if you can add extra living space to the home, you could significantly increase its value and its desirability.

Ravenscroft says: "Buying a home with the potential to extend can be a good idea, such as a corner plot, a place with enough roof pitch to put rooms in the loft, or a property with a large garden. Even if you don't want to do the extension yourself, the property will be appealing to future buyers because of its scope to extend."

5. Move to the North
It's tough for first-time buyers everywhere but it's common knowledge that those in the South of England, particularly the South East find it much harder to get on the ladder than those in the North, Wales and Scotland. House prices are simply so much more expensive.

For example the average house price in London in the first quarter of this year was £306,919 compared to £128,594 in Scotland, according to Nationwide.

While it might seem like a drastic measure, relocating to a new area – either further north, or even just a cheaper town in your region - could save you a fortune. It might be worth considering, particularly since cities like Leeds and Manchester are hubs for legal services, finance and creative industries, so there is the potential to make an interesting career change too.