We all know that the property market is ever-changing and following the recent election and the cutting of interest rates it is now more important than ever to analyse the market before diving straight in. Here is a rundown of what the market is currently doing, how you can break into it and some tips for making your goal of owning a property a reality.
INTEREST RATE CUT
At the beginning of the month, the Royal Bank of Australia cut interest prices to 1.25%. This cut will see mortgage rates fall although housing prices currently are still in a decline. This decline should not last too long, however, as it is expected that housing prices will start to stabilise as we enter 2020.
The rate cut will entice more buyers to take action and start to invest while the market is in their favour. In the past, interest rate cuts have pushed property prices up, however, in our current market, these lower rates are likely to impact the prices only slightly.
How will these cuts support housing prices:
- Help make future rental income more valuable – making a property less attractive to investors
- Help boost cash flows for borrowers and future borrowers
- Trigger investors to return to the property market
- Help shift the market momentum
Essentially these lower interest rates will provide support to housing prices, meaning either a slowing or end to price falls in larger cities and a boost to price growth in smaller, upcoming city centres.
FIRST HOME BUYERS SCHEME
The first home buyers scheme is an initiative introduced by the current government that endeavours to help first home buyers to enter the market with as little as a 5% deposit. Each year 10,000 of these loans will be up for grabs and the scheme will commence as of January 1st 2020. First home buyers will also not be required to purchase lenders mortgage insurance (LMI).
Things to consider:
- Over the last 10 years there has been an average of 103,485 first home buyers per annum, so only 10% of first home buyers will benefit from the scheme. Due to this, it is important to ensure that you sorted financially and you are not banking on receiving the scheme.
- A 20% deposit is no longer required to take out the mortgage. Buyers can borrow with less than 20% deposit if they do LMI is either an additional upfront cost or amortised into the mortgage amount. LMI is not transferable, so if you choose to refinance, sell or purchase but still have less than 20% equity, LMI will be payable again.
- Borrowers will still need to pass normal credit checks
Positives – This scheme allows first home buyers to borrow with smaller deposits and no LMI, meaning they can potentially own a home sooner than expected.
Negatives – From a housing affordability perspective, it is hard to determine how this scheme will help, rather than hinder. There will also be an increase in demand from first home buyers which can potentially lead to higher prices.
TOP TIPS FOR PURCHASING YOUR FIRST HOME
- Work out your price limit and apply for pre-approval. This will not only show you are keen and ready to enter the market, but it will also help narrow your property search.
- Be clear about what you want. Speak to agents and real estate professionals and let them know what you are looking for. You will be surprised at how much they can help you as a buyer.
- Inspect as many properties as you can. It is extremely unlikely that you will buy the first house you walk through. Not only will looking at more properties help you widen your search, but it will also help you gain a better understanding for the market.
- Be consistent with your savings.
- You don’t have to buy right now. Just because you have pre-approval and you think you are ready to go, you don’t have to buy right this moment. You might be better off waiting around for the perfect property.
iThink Property has a team of real estate agents in Ipswich and Toowoomba offering property sales and property management services. With a passion for people and property, iThink Property was conceived with the notion of building a team of good people to work in a real estate brand that did things differently. iThink Property focuses on transparency, communication, innovation and teamwork and has become a leading independent brand with unique points of difference. So whether you are thinking of buying, selling or renting, think iThink Property.
TAYLAH ANTONIOLLI – MARKETING & COMMUNICATIONS COORDINATOR
07 3202 3040
A go getter and doer, Taylah is a no excuses, get the job done kind of girl. With a strong work ethic and high attention to detail, Taylah is happy to help out wherever she can. Armed with a degree in business specialising in marketing and public relations Taylah brings fresh ideas and innovation to the iThink team.
TAYLAH ANTONIOLLI – MARKETING & COMMUNICATIONS COORDINATOR