A question of time: why first home buyers should take advantage of the current market
Over the past few years the Australian property market has undergone a number of changes that have seen conditions shift. A slew of changes implemented by both state and federal governments, as well as regulatory bodies, have resulted in a dip in house prices, following over a decade of major growth.
While this has caused some uncertainty in the market, the current state actually presents a unique opportunity for first home buyers to get a foot on the property ladder. Buyers have been locked out of the market in recent years due to sky-high prices and strong competition, but today’s market is a buyer’s market.
In these conditions, we often see buyers putting their purchase activity on hold and waiting until the market strengthens before getting in. In fact, we advise the opposite.
When prices are low first home buyers, and even second home buyers, will find they get better value and their money will go a lot further than it would have 12 months ago. That could mean they’re able to afford a home in a slightly nicer suburb with better school zones or buy a home with an extra bedroom.
Given so many are being extra cautious and waiting it out, there is less activity in the buyer’s market, reflected through recent auction clearance rates. This means savvy buyers who look now are facing much less competition, both from owner-occupiers and investors.
Less competition means vendors are likely to be more agreeable and buyers are finding themselves in a great bargaining position to negotiate a favourable price and terms.
A question we often get asked is: “but what’s the point in buying now if my house risks losing its resale value?”
The important thing to remember here is that the property market is cyclical, so while prices are low now, they will bounce back up. Property investment is a long-term game that rewards those with patience and persistence. Buyers that purchase now, at the current ‘bottom’ of the cycle, are in a strong position to benefit from significant capital growth in the medium to long term.
The key market drivers that made our market so strong for so long still remain and will continue to drive demand for housing that, at this rate, will outstrip supply.
With our relatively stable government, high level of liveability, good schools and great employment opportunities, Australia remains a top destination for international investment. Our population growth is also a key driving force behind the demand for new housing; ABS data reveals the nation’s population is expected to grow by up to four million people over the next 10 years.
It’s clear that now is a good the time is now for home buyers to secure their home; however it won’t last long. The transient nature of the property market will see house prices stabilise later this year, and likely start to increase in early 2020.
This expected upswing will bring with it increased competition and could well see buyers struggling even more to secure their first home. Rather than wait and see, savvy first home buyers should strike while the iron is hot and enjoy the benefits of a, temporarily, cooling market.
Harcourts Victoria is one of the state’s fastest growing real estate networks, with over 80 offices established. Over the last 12 years, the team has built upon strong foundations to more than triple the brand’s market position across the state. Harcourts Victoria now boasts a strong team of sales professionals and auctioneers, a dynamic property management division, mortgage finance options and a free moving home service, as well as a state-wide support team.