How to zero in on your property goals
The new financial year has brought with it a significant change in the property market. Whether you are a first home buyer, an investor, looking to downsize, up size or simply looking for a new home this is what you need to know.
- The property market is picking up
After months and months of negative headlines and doom and gloom scenarios, the property market looks to have bottomed out. That means home buyers wary of purchasing a home that would fall in price, no longer have to worry about that.“In most circles it is felt the bottom of the market has been reached, or is very close to being so,” Cohen Handler’s Simon Bailey explains.
“Nearly 100 suburbs have median prices higher than a year ago. In Melbourne 57 percent of suburbs with apartment markets have median unit prices rising, not falling. In Sydney in suburbs such as Neutral Bay, Potts Point and Palm Beach, there has been sustained growth over the last 12 months.”
- Buyers have greater access to credit
Two factors have come into play here:
- The Reserve Bank’s decisions to repeatedly drop the cash rate, and
- APRA’s move to relax lending requirements.
The cash rate influences what interest rates the banks loan to customers at. While the Australian Prudential Regulation Authority’s decision to allow banks to reduce their serviceability assessments when processing home loans has made loans easier to secure and will allow buyers to obtain loans up to 14 percent higher than under previous rules.
Together, this significantly increases the amount of money buyers can borrow while reducing the interest to be paid on the loan.
“The tough lending environment is gradually easing,” Simon Bailey continues.
“The banks are again starting to compete for lending business and APRA’s move to scrap its previous “stress test” buffer has had a marked positive effect all around.”
- ‘The ScoMo effect’
The surprise Federal Election win by Prime Minister Scott Morrison has buoyed the property market, after the Labor Party’s proposed legislative changes, such as those to negative gearing, were comprehensively rebuffed by voters.
“A lot has changed since the Federal Election for the better as far as the real estate market is concerned,” Simon Bailey says.
“Buyers are now comfortable in the knowledge of what the implications of the election mean for the property market for the foreseeable future.
“Economic growth remains consistently high and the outlook is positive.”
- Investor pull back
Investor activity in the market has dropped 45 percent since 2016, with many investors continuing to lack confidence in the market.
This has opened the way for first home buyers, as they and investors often target the same price points. Previously that has resulted in many first home buyers being squeezed out of the market amid competition and rising prices.
That means a greater opportunity now exists for first home buyers but also for savvy investors keen on taking advantage of an improving market.
- Market conditions favouring first home buyers
Internal and external forces have helped to shape a market favourable to first home buyers.
Greater access to credit means their budgets have increased, meaning they have access to more stock. While less investors mean less competition.
The Government’s First Home Loan Deposit Scheme is also a big boost for first home buyers. Under the scheme eligible first home buyers will be able to purchase a house with a deposit as low as five percent. Previously buyers required a deposit as high as 20 percent.
Also, buyers could save around $10,000 in Lenders Mortgage Insurance as part of the scheme.
- The rise of the buyers’ agent
Buyers’ agents are becoming an increasingly indispensable part of market transactions and a vital piece of the property puzzle for home buyers. When you have a buyers’ agent on your side in the search for your home, you have someone fighting for you and putting your interests first – in the same way selling agents act for their vendors.
The crucial services that Cohen Handler buyers’ agents offer are:
- Expert understanding of market conditions
- In-depth local knowledge
- Extensive contacts within the real estate industry
- Access to off market properties
- Strong negotiating skills
Contact Cohen Handler today and achieve your property dreams with us.