First home buyers are back – big time

Each time a booming market begins to experience a softening of prices, something interesting happens.

When the investors get spooked or can no longer afford the entry prices and when upgraders put off their next purchases, the first-time buyers emerge. Finally, after a long period of being locked out, it’s their time in the sun.

And it’s what we’re starting to see now. In capital cities where a long run of growth has started to slow, debutants are making their moves.

Is it the right time for you take a step on the ladder? Let’s have a look.

What’s happening on the ground

Genworth is the country’s largest mortgage insurer and regularly releases data on the number of new policies it underwrites each month. It’s a pretty good look at what’s happening in the property market in real time.

Insurance For LoansIts latest results for July show a larger share of insurance for loans with deposits of 10 per cent or less. These are the types of mortgages typically taken up by first home buyers.

The trend was strongest in Sydney, which has been experiencing a softening in prices over the past 12 or so months. But there was upward movement in many other cities, too.

What’s driving it? Put simply, prices.

National property prices fell 1.6 per cent over the past year, with Sydney shedding 5.4 per cent and Melbourne down 0.5 per cent.

In New South Wales, the government reported a tripling over the past year in the number of first-timers taking advantage of stamp duty concessions.

There’s also anecdotal evidence of an uplift in activity in Melbourne, and plenty of buzz about markets like Brisbane and Adelaide that have been pretty quiet up until now.

It’s not just big cities seeing first-timers out in force.

Geelong in Victoria has seen a whopping 85 per cent increase in the number of first home buyers, while numbers in Bathurst in New South Wales are at their highest level in six years.

Competition is building

There’s an odd psychology in real estate that confidence is high when things are very, very good, but begins to wane when things are less certain.

It doesn’t make a whole lot of sense.

Let’s say you want to buy a new television. You’re after a top-of-the-line model with all the bells and whistles. You’re going to have to spend a bit to get what you really want.

Basic RgbA major retailer holds a stocktake sale. They’ve got too much product and want to move it, so for a weekend, supply is going to outweigh demand. There are some major bargains on offer.

You wouldn’t stay home and sit on your hands, would you? You’d jump in your car, race down to the shops and grab a discounted TV as quick as you could.

When the market slows, it means that demand has fallen. For first-timers, this means there’s less competition from buyers with more money and more negotiating power.

Why would you not want to be active in this environment?

The uncertainty of most markets at present is something to consider, for sure. And depending on your circumstances and long-term investing goals, you’ll want to make particular decisions based on careful research.

But avoiding buying all together because others are is unwise.

Get out there, enjoy the fewer competitors and lower prices, and nab yourself a better deal than has been on offer for many years.

There are still hurdles

Aside from the more important need to do your research, there’s another big consideration for first home buyers at the moment.

Banks are being more prudent in their lending because of softer market conditions.

Open HouseThey’re going over things more carefully, they’re being more conservative with valuations and they’re putting up a few more hoops for borrowers to jump through.

Add in the negative attention of the Banking Royal Commission and it’s a pretty interesting lending climate for all buyers, regardless of their circumstances.

It can make dealing with a bank time consuming, frustrating and very complex.

It’s why having a qualified and savvy financial expert as part of your investment team is more important than ever.

You want someone independent who’s working in your best interests to take on the burden of finding the most appropriate mortgage product and then navigating the lending maze on your behalf.

Getting the right financial advice about buying your first property

First home buyer New

First home buyers are back in the market in a big way. In fact, the numbers of first-time buyers are the highest since about 2012.

And it’s not hard to see why, with prices softer in many locations, which means more chances for them to get a foot on the ladder.

The world of banking and finance can be a pretty daunting one for both novice and sophisticated investors and since our establishment in 2002 we’ve focused on providing outstanding service and business standards.

This approach has been vindicated many times by our multi award-winning approach.

So, if you’d like to understand more about buying your first property, why not contact Intuitive Finance today to ensure you have the right information and expert support on your side from the very beginning.

If you’d like an expert to teach you more about first home buyer finance or if you have any other questions, please just contact us directly and we’ll be in touch.

Discuss your specific needs & formulate the right strategy for you. Get in touch to organise your complimentary 60min session today!

The information provided in this article is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs.

Lachlan Mirams

Lachlan Mirams

Finance Strategist at Intuitive Finance
Lachlan joined Intuitive Finance in September 2013, initially in an administrative role before moving to Client Services in October 2014. Lachlan moved into a new Relationship Manager role in January 2017 where he oversees our Client Services Managers along with dealing in some strategic analysis himself. He has recently completed his Diploma of Finance and Mortgage Broking Management and will commence broking in January 2018. Outside work, Lachlan is a very talented footballer, currently playing in the Victorian Amateur Football Association with St Bedes/Mentone. He is a very avid sports fan with his most passionate teams being the North Melbourne Kangaroos in the AFL and the Cleveland Cavaliers in the NBA. In his spare time, he enjoys catching up with his mates, playing football & basketball and watching any sport that is on TV
Lachlan Mirams

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