A lot is happening in the market to turn a first home buyer’s frown upside down. Here are five trends making it easier for first home owners to get a foot on the property ladder, brought to you by industry super fund-owned bank ME.
1. Housing is more affordable
Home values nationally have dipped 7.6% since the market peaked*, giving first home buyers a lot more bang for their buck.
In Sydney for instance, the median apartment price is now $699,000^, down from $783,000** two years ago – a saving of $84,000. House prices in Sydney have also fallen over the period but the current median house price of $877,000 (down from $1.05 million two years ago) still puts a house out of reach for many Sydney-based first home buyers. In more affordable Melbourne, a house is still a possibility for first home buyers, especially as today’s median house value is $716,000 compared to $826,000 in October 2017, a price cut of $110,000.
2. The property market is trending upwards
As good as falling property values are to encourage home buyers into the market, a strong market allows first home buyers to purchase property with confidence, knowing they are investing in an asset that will rise in value over time. After a period of falling values, the property market is enjoying an upswing. Home values nationally rose by 0.8% in August^^, the biggest monthly rise since April 2017***.
3. Interest rates are super low
More good news. Home loan rates are at never-before-seen lows – and they could be heading lower.
First home buyers are paying loan rates below 4%. Not only is this pushing loan repayments down, it can help you get ahead with paying off your home loan sooner.
4. Lending rules have changed
Bank regulator APRA has changed its rules around how it requires lenders to assess home buyers’ ability to repay their loan. Lenders add a margin to any home loan rate they offer to arrive at what is known as an ‘assessment rate’ to check home buyers can continue to repay their debt in the event of higher interest rates. In good news for home buyers, APRA has allowed lenders to lower their assessment rates.
More Australians will have the opportunity to secure a home loan, and it may also mean you’re able to borrow more – putting your dream home a step closer.
5. There’s a treasure trove of financial incentives
From the First Home Owner Grant to savings on stamp duty, first home buyers can tap into a treasure chest of support.
In Victoria, for instance, the First Home Owner Grant (FHOG) is worth up to $20,000. Add in stamp duty savings that can total as much as $31,000, and a first home owner can pocket a financial helping hand of $51,000.
In New South Wales, first home owners have the support of the $10,000 FHOG for a new home, plus stamp duty savings of up to $24,680 for a new or established home.
To see what’s available in your patch, head to your state/territory government website.
Add these factors up, and it’s easy to see why first home buyers have plenty of reasons to smile. It’s is an ideal time to get into the market, but it’s important to see what’s right for your current circumstances.
This article is brought to you by ME. For more information, please visit www.mebank.com.au
Members Equity Bank Limited ABN 56 070 887 679 AFSL and Australian Credit Licence 229500.
*CoreLogic Hedonic Home Value Index, August 2019
^CoreLogic Hedonic Home Value Index, August 2019
**CoreLogic Hedonic Home Value Index, October 2017 Results
^^CoreLogic Hedonic Home Value Index, August 2019
***CoreLogic Hedonic Home Value Index, August 2019