FIRST home buyers who missed the opportunity to enter the property market last year are in the prime position to make their first purchase according to Aussie founder and executive chairman John Symond.
Mr Symond said the Reserve Bank of Australia’s recent decision to hold interest rates stable following its February meeting and subsequent comments from Governor Glenn Stevens pointed to rates being kept at relatively low levels for some time.
“The Reserve Bank of Australia’s move to not lift rates in February is hugely significant and is great news for Australian homeowners,” Mr Symond said.
“It has given confidence to Australian consumers that interest rates won’t skyrocket.”
Mr Symond said now was the best time for first time buyers to enter the market as last year the first home buyer (FHB) sector was out of control, as the boost to the FHB grant spurred overly eager buyers to pay more than market value for their first property purchase.
“In many metropolitan areas, prices for properties in the first home buyer range were inflated due to increased demand,” Mr Symond said.
“Over-excited first home buyers were paying up to $50,000 more for a property just to get their $14,000 grant.”
“There were stories coming out of the property market of queues of people lining up for open houses and real estate agents not even allowing prospective buyers to view homes unless they had proof they had their finances approved.
“This was a crazy situation and one which can only lead to inflated prices.”
Figures from the Australian Bureau of Statistics show the heat has come out of the FHB market with the percentage of FHBs as a percentage of owner occupied purchasers dropped from 28.5 per cent in May to 22.1 per cent in November.
According to RPData, median home prices fell slightly in December by 0.3 per cent as the seasonal impact of the summer slowdown combined with rising interest rates and fading first time buyers finished off a bumper year for property growth with national values up 11.5 per cent annually.
Mr Symond said Australians looking to buy their first home were now well positioned to enter the market and were still entitled to the standard $7000 grant, but other incentives were available and may vary between states.
“For those worried they may have missed the boat with the bonus grant, I believe they are now the ones in the best position to negotiate a good price on their first home,” he said.
“If I was a first home buyer I would have waited until the bonus grant had ended, because now is the smart time to buy.”
Mr Symond said new homes were where the real bargains were as builders were still offering special deals and incentives – as were State governments– to entice buyers to build their own home.
“As there is a shortage of new homes, builders and state governments are falling over themselves to get new buyers into that market,” he said.
“There are many fantastic initiatives on offer, but I caution potential homebuilders to do extensive homework when entering into a contract to build a house.”
“You need to know exactly what is included in the costs, such as floorcoverings or landscaping, as you don’t want to be up for any extra expenses when the house is finished.”
Mr Symond said purchasers of established homes also needed to carry out a number of tasks before they committed to their first property including.
This includes extensive research and due diligence on any property they are interested in purchasing and ensuring they have a realistic budget and have factored in whether they can cover their mortgage following future interest rate rises.
He said there could be traps for young people jumping into the market without the discipline of saving and having a financial buffer to cover their mortgages if their circumstances changed, such as starting a family and losing an income.
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