Our market moves through stages of who is buying. Currently, it is great to see relative strength in the first-home buyer segment.
This is driven in part by the government incentives, but also by support from Baby Boomer parents. Classified as born between 1946 and 1966 this generation have seen the massive wealth creation benefit of home ownership. They are now active in encouraging young family members to buy their homes too, and where able to, providing support via ‘bank of mum and dad’.
With interest rates currently on ‘hold’, educated first home buyers are looking to buy what they can now. There is an expectation among many that future rate reductions will add to housing prices. I agree with that expectation.
There is also evidence in this market of investor selling, due to increased costs of owning investment property. Whilst some may see this as a good thing, danger looms.
In a balanced market there will always be demand for 30-35% of properties to be available for rental, that is where long term rent demand sits. Media headlines may well decry negative gearing, however it exists to encourage investors into the market, to provide the required balance of properties for rent. The Goldilocks 30-35% requires incentives, then regular fine tuning. Currently we have that ‘balanced’ market, but still a shortage of rentals, due to the overall lack of housing. This is driving down the availability of rental properties and driving up the cost of renting.
First home buyers have two strong reasons to buy. Firstly, to avoid the risks of having to find somewhere to rent at a time of increasing rents and decreasing available rental properties. With the housing shortage we have, those problems are increasing.
Secondly, future-proofing wealth and retirement - most of the wealth created for Australians in property has been as a side effect of home ownership, and owning your own home is essential for a comfortable retirement.
If you are a first home buyer wishing to ‘run your numbers’, please give us a call. We can explain what government incentives are available for your situation and assist you to understand what you can and cannot do. History continues to prove that the best time to buy was yesterday. The second-best time to buy is today.
Integrity Finance Australia has been serving the community since 2006. If you have any questions or want to know what your options are with your refinancing, borrowing capacity or your home loan, then please email support@ifafinance.com.au , or call us on 03 9511 8883.
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