Entering the property market for the first time is a huge commitment, but certain challenges may make it harder for first home buyers to get their foot in the door.
Over the past year, house prices have continued to rise throughout the country. According to the latest Australian Bureau of Statistics, the weighted average of the eight capital cities has risen by 2.1% from December 2011 to December 2012. In the major cities, house prices rose in Sydney by 4.2%, Brisbane by 0.7%, Perth by 5.6%, Canberra by 0.3% and Darwin by 10.1%. These increases will place added pressure on first home buyers being able to afford their dream home.
Saving for a deposit is one of the biggest challenges for first home buyers. It may take some time to obtain the amount needed, especially when there are so many other living costs. Banks and lenders also need to see that you are able to save money. One example is you need to be able to save a minimum of 5% of the purchase price over a minimum three month period.
Although the Government does provide some incentive, they have recently made grant cuts in certain states. For example, in New South Wales, the $15,000 First Home Owner Grant is now only available for new homes and will actually reduce to $10,000 on January 1 2014. In September 2012, the Queensland Government announced they were axing the $7,000 First Home Buyers Grant and instead only giving a $15,000 to eligible first home buyers who bought newly constructed homes. So, those wanting to buy an established home, now miss out on the grant.
For those planning to buy their first home, it is important to plan ahead. It is possible that house prices will continue to rise at a faster rate than average person’s income; however with the right budget and strategy, first home buyers can overcome these challenges. The best advice is to call a credit manager at State Custodians as they can help you and provide you with the tools to become as prepared as you need to be.