So you’re a first home buyer. When’s a good time to buy?

It’s a difficult time for first home buyers, but it’s not all bad news!

According to the Australian Bureau of Statistics (ABS), the number of first home buyers in the market has fallen about 35% over the past year[1], which is hardly surprising given rising interest rates, the end of some government grants and tighter borrowing restrictions.

And yet there are still opportunities out there, for those who can summon the courage and means to make the leap into the property market in 2023 – not least of which is likely facing less competition and softer prices than during the boom.

Are property prices expected to keep falling and how will you benefit?

As interest rates rise and demand softens, house prices are expected to continue falling. At the same time, however, cost of living pressures and rising inflation mean that home buyers may also face a cut in their purchasing power, while rising interest rates are also making repayments more expensive.

But with more property on the market and less demand, it could still be a good time to dip your toe in the water – especially if you have lowered your price range and you’re scoping different areas to secure a home you can see yourself living in.

Additionally, the deterioration in rental affordability may also encourage more home buyers. While not everyone has money saved for a deposit, home ownership may be preferable to rising rents. Lower property prices can also reduce transaction costs like stamp duty.

As properties take longer to sell, it may also leave you with more time to organise finance, complete due diligence on properties, and check out what other properties are on the market. Similarly, as homes take longer to sell, vendors typically become more flexible on their pricing expectations.

What government grants are you eligible for?

There are a range of government grants and schemes for first home buyers that have the potential to increase your purchasing power and lower the entry hurdle to property ownership.

So ask yourself if there are there any that you can potentially make use of. For example, there are a number of state-based initiatives in the market. Victoria offers first home buyers stamp duty exemptions up to $600,000 and concessions to $750,000, as well as a shared equity program allowing low-deposit purchases. Plus, the federal government’s First Home Guarantee program provides first home buyers with access to low-deposit purchases of 5% without mortgage insurance.

So research your options or speak to a mortgage broker to find out what grants and concessions are available.

So … is now a good time to buy?

Overall, market conditions don’t, of themselves, determine whether or not it’s a ‘good’ time to buy your first home. Instead, the right time to buy comes down to personal circumstances. These include things like your current living situation – whether that’s renting or living rent-free with your parents. It might also depend on whether you have a big enough deposit to offset higher mortgage costs, while the security of your employment is another important consideration, as well as your ability to service a mortgage and how you feel about home ownership and property investment more broadly. Keeping across market trends can be useful, but ultimately, it’s important that you undertake a careful assessment of your own situation and personal goals.

For more information about Victoria’s HomeBuilder grant guidelines visit:

https://www.sro.vic.gov.au/homebuilder-grant-guidelines.

For more information about the Federal Government’s First Home Guarantee program, visit:

https://www.nhfic.gov.au/support-buy-home/first-home-guarantee.

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You alone are solely responsible for determining whether any investment, asset or strategy is appropriate or suitable for you based on your investment objectives and personal and financial situation. You should consult a suitably qualified professional about your specific legal, tax (including stamp duty), financial or investment situation before purchasing off-the-plan property.

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