Back in 2008, there was a fairly significant increase in the number of first home buyers in the market. At the time, interest rates were low (comparable to what they are today), the First Home Owners Grant was at $21,000, and the exemption for stamp duty applied to all homes, not just new homes. Since that time, there have been lesser spikes in first home buyers coinciding with the various changes to the first home benefits.
Today, first home benefits are limited to first home buyers buying new homes and while there are still first home buyers in the market, they aren’t as motivated as they once were. Some are still buying vacant land to build or buying off-the-plan apartments to qualify for the first home benefits, while others buying existing properties and accept the fact that they can’t qualify and won’t receive first home benefits.
So who’s in the market now? My observation over the last 6-12 months is that with the relatively low interest rates, property investors have flocked back into the property market. Many of them are cashed up, or apparently more willing to take on the debt of an investment loan because of current interest rates (another interesting fact to note is that while interest rates are relatively low to what they have been in the past, Australia still has some of the highest interest rates globally compared to other countries).
Sure, first home buyers are still in the mix, but given the way the property market has been travelling and apparent urgency to buy property resulting in higher-than-asking-price offers, many first home buyers have literally been squeezed out of the market. Also not so long ago, the rental market was hot, prospective tenants had to queue outside open homes for rent, and landlords were inundated with applications to rent with each applicant attempting to outbid the other with offers of higher rent. These days, the lines are now outside of open homes for sale if it even gets that far. In many cases, with the demand so high that many homes are sold even before they reach the market.
In speaking with many of my clients, I could say that there’s almost a fear that if they don’t buy now, they’ll miss the opportunity to buy. They feel that property prices will continue to rise and that they’ll be quickly priced out of the property market. It sounds far fetched, but I think they could be right. The property market normally starts to slow down around this time of year in the lead up to Christmas and the New Year, however it doesn’t seem to show any signs of that slow down at the moment. It’s going to be interesting to see what the new year brings!
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Director – Property Lawyer