Thomas Glaister, 30, and partner Angela George, 33, are on the hunt for their first home. Picture: Jane Dempster
Thomas Glaister, 30, and partner Angela George, 33, are on the hunt for their first home. Picture: Jane Dempster

Secret weapon helping first home buyers

Winter will offer first home buyers ideal conditions for cracking into the housing market as still diminishing demand for property promises to cool further, housing experts claim.

First home buyers will be in the box seat over the colder months because fewer rival home seekers will be in contention for sales, especially upgraders and other next home buyers.

Many of these buyers, who would need to sell their homes, may choose to wait the market out, fearing weaker demand would force them to cut their prices, the experts said.

First home buyers also face less competition from investors, who once accounted for nearly 60 per cent of Sydney property purchases.

This Mount Colah home had its price cut by more than $180,000.
This Mount Colah home had its price cut by more than $180,000.

Investors have been struggling to get financing from banks since the Australian Prudential Regulation Authority began clamping down on loans for investment purposes in 2017.

Recently announced first home buyer incentives, which both the Labor Party and Coalition will carry into this weekend's federal election, may also make it easier for new buyers to claw their way into the market.

Prime Minister Scott Morrison's proposed helping hand for first home buyers, which Bill Shorten has promised to match if the ALP wins the election, would provide 10,000 eligible first home buyers with help in purchasing properties with only a 5 per cent deposit.

The downturn is serving up cheaper home deals.
The downturn is serving up cheaper home deals.

Under the $500 million plan starting from January 1, 2020, the government would guarantee the difference between 5 per cent of the purchase price and the 20 per cent deposit banks usually require for a loan.

The Reserve Bank of Australia's decision last week to keep the cash rate on hold is another sign that bodes well for first home buyer prospects.

Banks are now offering competitive rates, with home loans company Tic Toc recently announcing one of the country's lowest headline variable rates at 3.47 per cent.

Tic Toc founder Anthony Baum said first home buyers were being offered competitive rates because of falling demand from investors and upgraders.

"It's a much better time to be a first home buyer applying for a loan than it was two years ago," Mr Baun said.

My Housing Market economist Andrew Wilson said existing first home buyer incentives, including the NSW government's stamp duty discounts for first-time buyers of properties under $800,000, were already having a pronounced impact.

"First home buyer numbers have been recovering after being at a nearly seven-year low," Mr Wilson said. "The (state) government incentives appear to be working."

Mortgage data showed first home buyers now account for about 18 per cent of property purchases around the country, well up from about 11 per cent in 2015.

This Blakehurst home was once listed at about $1.63 million but the price guide was later cut to just under $1.35 million.
This Blakehurst home was once listed at about $1.63 million but the price guide was later cut to just under $1.35 million.

Realestate.com.au chief economist Nerida Conisbee said winter would be a "quieter" period for the housing market with fewer buyers actively looking for homes but fewer homeowners listing.

This alone would normally suggest a balanced market, but the fact that there were still many homeowners who were trying to sell properties they had first listed back in 2018 meant buyers were in a "strong position", Ms Conisbee said.

"Fewer homeowners are listing, but there is a still a lot of (stock)," she said. "It's a good time for buyers."

The market shift has been encouraging for some buyers. Thomas Glaister and Angela George say they're now getting serious about buying their first home.

The price for this church converted into a home was $989,000 but it is now $795,000 to $850,000.
The price for this church converted into a home was $989,000 but it is now $795,000 to $850,000.

The couple are hoping to soon bag a house in the Marrickville area for about $1 million and have been actively looking at sales.

Mr Glaister, 30, said they made the decision to get into the market after consulting financial planners who recommended they pounce on lower prices while they still can.

"We had been looking at a few listings over the past year or so and the prices have definitely gone down," Mr Glaister said. "A lot of the properties also seem to be staying up a bit longer … there doesn't seem to be that much competition from (other buyers) so we thought this could be good for us."

Thomas Glaister and Angela George want to purchase in Marrickville.
Thomas Glaister and Angela George want to purchase in Marrickville.

Real Estate Buyers Agents Association president Rich Harvey said first home buyers hoping to capitalise on the improved conditions would need to make sure they purchased in the right suburbs.

"Property selection is crucial in this market," he said. "As a first-time buyer, if you get it wrong, it can be a very long and protracted process to get out of but if you get it right, it can set you up for life."

Mr Harvey suggested first home buyers "be realistic" and aim for a more modest home for their first purchase with a view to trading up a few years later.


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