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First Home Buyers – Why Now is a Great Time to Enter the Market
For many, the dream of home ownership takes top spot on the list of life goals. Unfortunately, however, the cost of getting into a home of your own has often been a barrier for Australians – but now things are starting to turn around. The current economy, housing market and government incentives may be of concern to many, but now is a great time to get into the property market if you’re a first home buyer. Here are a couple of reasons why…
Lower Interest Rates
As the Reserve Bank (RBA) recently cut interest rates further, down to 1.0%, the current lending climate is one that favours borrowers. In particular, those looking to take care of both the loan amount and interest with a Principal and Interest (P & I) loan and get into their own home are faced with greater lending options, and can more easily find a lending facility that works for them in the current climate.
There are attractive incentives for first home buyers at the moment – for both those looking at buying new or building, and for those buying an established property. First home buyers who build a home or buy one brand new (never lived in), the Government is offering a First Home Owners’ Grant (FHOG) of $10,000. To be eligible for this, you must be an Australian Citizen or permanent resident at the time of application, you or your spouse may not have been homeowners before, and you must occupy the home as your principal place of residence for a continuous period of six months within the of completion of the home.
If you’re buying an established property, you won’t be eligible for the FHOG, but you will still be able to apply for the first home owner rate (FHOR) of duty if certain conditions are met. Put simply, this is a reduction in, or complete removal of, the stamp duty on a home purchased. If an established property is purchased for $430,000, no duty needs to be paid; but if the price exceeds $530,000, full duty is payable. If the value is between $430,000 and $530,000, a discounted rate applies.
Lower House prices
Leaving behind, for a moment, the technical jargon behind interest rates, stamp duty and government grants, a simpler concept to understand is that the housing market, particularly in WA, has pushed prices down to a point that it is unlikely houses will be this cheap for a very long time. As such, it is prime time to snap up a good deal on a home, and savvy purchasers will be able to secure something that is likely to increase in value significantly when the market picks up again. A prominent indicator of this is the growth in income vs. the growth in housing prices over the past decade. In that time, dwelling values increased only 4.9%, while household income increased by 32% in the same timeframe. As such, it’s taking less time to save for a deposit, and households are generally finding it easier to service their home loans.
Are you looking to get your foot in the door in the housing market? Call McKinley Plowman’s Finance team on 08 9301 2200 or visit www.mckinleyplowman.com.au to book your complimentary, no-obligation appointment to see how we can help you get into a home of your own.
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