Is now a good time for first home buyers to get into the market?
Whether you're looking to buy a house or investing on one, the happenings of this year will definitely cast doubt. Here's why we think that Australians shouldn't back down from the housing market this year.
1. Interest rates are at record lows
Home loans in Australia are the lowest of all time right now. Just one year ago, the average variable rate was 3.81%. Latest market values indicate that’s down to 2.91%. Fixed rates are even lower – at an average of 2.73%.
This is seriously good news for first home buyers. Low rates help to keep monthly repayments down, while boosting your borrowing power.
2. First home buyers can enjoy a valuable helping hand
Currently, first home buyers are eligible for 3 different differnt supports through the state and commonwealth governments:
- First Home Loan Deposit Scheme: the FHLDS lets you buy a home of your own with just 5% deposit and no lenders mortgage insurance. Conditions apply but as the scheme is only open to 10,000 applicants each financial year, it really is a case of first in, best dressed. If you’ve only got a small deposit, here’s your chance to get into the market sooner.
- HomeBuilder Grant: if you’re planning to build a new home or buy a budget-friendly ‘fixer upper’, the HomeBuilder could make it happen with a $25,000 cash grant. Don’t delay though. Your building contract needs to be signed by 31 December 2020 to be eligible.
- First Home Owner Grant and stamp duty savings: amid all the excitement of new grants and schemes, it’s easy to overlook the FHOG and possible stamp duty concessions. If you’re eligible, they add up to big savings – and remember, the FHOG can be used as part of your deposit.
3. The property market is taking a breather
At the start of 2020, it looked as though rising home values could pose a problem for first home buyers. In December 2019, values nationally rose 1.1% in just one month, bringing quarterly price growth to 4.0%. More recently, some property markets have shown signs of cooling. According to CoreLogic, capital city home values dipped by a total of 1.3% over both May and June 2020.
The market may not stay this way for long though. CoreLogic also says that real estate agent activity is now tracking higher than the same time last year, and new property listings are up 42% compared to early May.
We’re also heading into the spring selling season. COVID-19 may mean it’s a very different sort of season from previous years. But traditionally, buyer activity is strong around springtime, and this could drive a rise in values.
The best time to buy is when you're ready
Ultimately first home buyers shouldn't try to time the market. The best time to buy a property is when you're financially stable and keen to buy. If you want a home of your own and the numbers work then waiting for a theoretical drop in prices doesn't really make a lot of sense. This is especially true if you're buying a home to live in rather than an investment.
Do your research, get a realistic budget together, prepare for your home loan application and find a property that suits you in a place you like. This is always better than snapping up a bargain property just because it's a bit cheaper.
Want more to read? Here's a detailed analysis from property experts that looks at few reasons like the economy, government policy, population growth, etc. to see how the housing markets have behaved previously in financial crisis.
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