Remember all the ‘smashed avocado’ media reports about how difficult it is for first home buyers to get into the market? Well now there’s good news! In recent months, we’ve seen a surge in first-home buyer activity in the property market.

Here’s our take on why property buying conditions are changing for the better for first home buyers.

1: Softening property prices

Over the past five years, property prices rose more quickly than first home buyers were able to save, making it difficult to find the necessary deposit to buy a home. However property prices have softened in both capital city and regional markets.

2: Tighter lending conditions for investors

APRAs crackdown on investment property lending and extra regulation on interest-only loans have made it harder for both local and foreign property investors to continue expanding their portfolios. Property investors and first home buyers tend to compete for the same properties, so this has reduced competition for people trying to get on the property ladder for the first time.

Over the past two years, property investors have been hit with:

  • Substantial interest rate increases for all investment property loans
  • Larger deposit requirements for interest-only loans, and
  • Considerable reductions in tax-deductible expenses for property investments.

If you’re a first home buyer at an auction, fewer property investors with deep pockets means there will be a better chance of winning the bid.

3: Low rental returns for investors

Another factor that has reduced competition with investors is the rapid reduction in rental returns Australia-wide. Gross rental yields are currently close to historical lows.

4: First-home Owner Grant (FHOG) and stamp duty changes

Demand from the first-home buyer segment has also been fuelled by new government incentives.

In NSW, First home buyers no longer pay stamp duty for new and existing homes valued up to $650,000. Concessions are available for properties up to $800,000.

Most other states have also introduced new concessions for first home buyers. Ask us if you’d like to find out more about the incentives in your state or territory.

5: Other incentives for first-homeowners

Aside from the FHOG and stamp duty exemptions, other incentives such as the recently re-elected Coalition government’s proposed guarantee plan whereby first homebuyers who have been able to save for a deposit of at least 5%, will be able to access a government guarantee for the remainder up to 20% of a house’s value.

As we get into the colder months, prices are dropping, interest rates remain low, and there are plenty of incentives available to help first-home buyers get started. If you’d like to know if you’ll be eligible to buy your first home this season, please get in touch with us.