The Australian property market moves in ebbs and flows, something that has occurred for decades and is mirrored in property markets across the globe. But right now, the market is primed for first home buyers in a rare alignment of the real estate stars.
THE GOVERNMENT HAS CREATED A FIRST HOME BUYER FRIENDLY MARKET
The Australian government actually want first home buyers to enter the market. For the last five years, the value of home loans provided to investors has almost matched the value of loans provided to owner-occupiers and at times exceeded it, but over the last year equilibrium returned and owner-occupiers are now receiving more loans than investors. The government is largely to thank for this welcome shift. By reducing the number of investors in the market, there is more stock available for first home buyers. In the 2017 Federal Budget, the government increased interest rates on investment mortgages, tightened up their availability and made reductions to claimable tax items, slightly reducing the tax benefits of investment ownership. So, the market is more generous to first home buyers than it has been in a long time.
THERE ARE MORE FINANCIAL OFFERS AND PERKS THAN EVER BEFORE
The first home buyer grants available right now are sitting at around $15,000 – $20,000 – considerably generous and more than they have ever been before. This makes buying a house incredibly affordable as long as you have a good savings track record and sustainable income. When this is coupled with the wide range of cash back offers available from developers at the moment, it makes it even more affordable.
MORTGAGES ARE AT RECORD LOW RATES
Home loans in Australia have moved considerably over the last 60 years reaching highs of 17% in the very early 90s. However, the last 12 months saw rates drop to the lowest on record at 4.95%, sitting at 1.8-2.5% higher than the Reserve Bank of Australia’s cash interest rate. The cash rate hasn’t moved in 13 months, so mortgages really have never been cheaper but how long it lasts is anyone’s question.
THERE ARE PLENTY OF HIGH CAPITAL GROWTH AREAS AT LOW PRICE POINTS
Combining those three previously mentioned things into one fantastic purchase option is simple, because there are high volumes of development occurring across Eastern Australia to keep up with the forecasted population growth. This means that in addition to the new apartments and units established in inner-city areas, there are huge residential estate developments on almost every fringe of every capital city. These are the areas that in 20 years will be considered almost inner-city as more and more development and construction happens, creating fantastic capital growth prospects. Because these estates are brand new, home and land package buyers are eligible for first home owner grants and more perks.
When you combine those four elements, you start to see just how perfect the market is for first home buyers and our advice for any out there is to take advantage of it, because these conditions won’t last long!