Why the property market still benefits first-time buyers
The property market may have experienced some ups and downs over recent months, but nevertheless, it still appears to be working in the favour of first-time buyers.
As the final quarter of the year gets underway, which areas of the market are benefiting purchasers, and how long are they likely to continue for?
Access to home loans is improving
Measures were brought into force late last year to make it more difficult for investors to enter the property market. In theory, this meant other buyers should have a better chance of being able to secure home loans and make those all-important first steps onto the ladder.
The latest figures from the Australian Bureau of Statistics (ABS) suggest this is working, as lending to owner-occupiers improved between July and August this year. A 2.9 per cent month-on-month increase was registered, which is good news if you’ve yet to approach a mortgage broker.
“Lending to investors seeking to construct housing fell away sharply during the month, following the all-time high reached in July,” explained Housing Industry Association economist Diwa Hopkins.
She emphasised that investors will need to be involved in the market in some capacity, as they’re crucial to ensuring a supply of newly-constructed housing is available.
The cash rate is still low
Borrowers have been enjoying a period of interest rate stability since May, and at its 6 October meeting, the Reserve Bank of Australia (RBA) decided this would continue for a while longer.
A low cash rate generally means lenders will follow suit, reducing the cost of home loans for first-time buyers. The RBA governor Glenn Stevens pointed out this was already happening, as “low interest rates are acting to support borrowing and spending”.
Of course, there’s no guarantee that the cash rate will be low for much longer. Playing the waiting game with your home loan application could pay off, or it might be wise to think about making your move sooner rather than later.
Affordability makes it onto the federal agenda
Housing affordability has been a major political issue for some time now, but the good news is that the government appears to be taking it on board. Treasurer Scott Morrison has made a commitment to start building more homes, which in turn should help drive down property prices.
Commenting on the decision, the Property Council of Australia suggested this could be just what the market needs to avoid overheating. Its chief executive Ken Morrison said the emphasis should be on supporting the construction sector.
“It is absolutely time to start targeting the supply of new homes which is the real culprit for increases in house prices,” Mr Morrison noted.
“The pressure will only come off prices if we keep up the supply pipeline of new homes, to address previous shortages and keep pace with population growth.”
Sales listings are rising
Having a wide choice of real estate in Australia to choose from also works in your favour as a buyer, which is why the latest SQM Research figures are likely to come as positive reading. Between August and September, the number of homes listed for sale increased 1.4 per cent on a national basis.
One of the biggest surprises was Sydney, where 11.1 per cent more properties entered the market. Perth and Darwin also registered significant increases, while falls were seen in both Melbourne and Canberra.
With homes for sale becoming more readily available, now could be the ideal time to think about getting onto the property ladder and making the most of these favourable conditions while they’re still around.