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Market ready for first-time buyers
Look beyond the figures for signs of a resurgence in 2014.
First-home buyers were a rare commodity in the property markets in Melbourne last year, with the ending of state government incentives for buyers of existing properties and ongoing competition from investors leaving them on the outer.
Figures from the Australian Bureau of Statistics last week showed that the number of first-home buyers as a proportion of total borrowers nationally fell to a record low of 12.3 per cent in November. Experts say strong prices growth is one of the main reasons for this drop off and it is forcing most to continue renting, with only a lucky few able to turn to their parents for help.
But there is some optimism that these buyers will return this year. Among those predicting a turnaround is national real estate group LJ Hooker, which estimates 110,300 first-home buyers will enter the market this year, up from 90,551 last year. Victoria should have 30,000 new first-home buyers and NSW 26,000.
Georg Chmiel, chief executive of LJ Hooker, attributes the recent decline in first-home buyer numbers to demographic, social, economic and price-related factors, as well as cuts in first-home owner grants, but he believes "the overall outlook is strong and encouraging".
It's a good time to buy in Melbourne, he says, although cost will determine where buyers look, with the inner suburbs proving tougher for first timers and parents in some cases helping out with deposits.
Melbourne-based property consultant Peter Hay says the fact that there has been fewer first home buyers in the market means now is a good time for them to buy - particularly given the current low interest rates.
"(A)nd they should try to get a fixed rate loan for as long as possible," he says.
Simon Cohen, of Sydney-based buyers' agents CohenHandler, expects continued competition in
that sector of the market this year, but says conditions will remain good for first-home buyers looking to purchase.
Angie Zigomanis, senior manager with BIS Shrapnel, is expecting a proportion of first-home buyers to be armed with a deposit during 2014.
The removal of the $7000 grant at the end of the June for established dwellings, and its replacement with a $10,000 grant for new or off-the-plan homes, has been offset to a significant degree by stamp-duty concessions for new properties, Zigomanis says.
This week's ABS figures showed that there were actually more of these buyers in Victoria in November compared with the previous month. First-home buyers made up 12.2 per cent of new housing loans, up from the record low of 11.7 per cent in October.
But not everyone is optimistic. Peter Bushby, president of the Real Estate Institute of Australia, predicts that, without a co-ordinated and strategic approach by governments at all levels, the return of first-home buyers to the market "may be delayed for quite a while".
He says that while interest rates are expected to remain low, the difficulty of raising a deposit remains "the major concern of first-home buyers".
Strong auction results pushing up prices in Melbourne and Sydney were also a concern, "pushing first-home buyers further away from being competitive with investors and changeover buyers".
Do's and don'ts for first home buyers
- Do your research when looking to buy. This includes spending time getting to know an area - its pros and cons - and what properties there typically sell for.
- Don't be afraid to seek advice. Fairfax-owned Australian Property Monitors offers a Property Report for $49.95.
- Do be patient - you don't need to land the first property you come across.
- Don't allow your emotions to get the better of you when buying. This is particularly the case of buying at auction.
- Do buy within your means. This means giving yourself financial wiggle room in case of unforeseen circumstances such as interest rates moving up or the loss of employment.
- Do be prepared to compromise - there's no such thing as a perfect property.
- Don't overlook obtaining a building inspection, particularly with regard to termites.
- Do get a fixed priced contract if buying a house and land package and make sure you're aware of any additional costs.
Sources: Peter Hay, Hay Property Group; Simon Cohen, CohenHandler Property Advisory; apm.com.au
Posted by David Adams - Domain (The Age) on 18th January, 2014 | Comments | Trackbacks
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