While some state governments are boosting new home buyer grants, the New South Wales (NSW) state government is reducing theirs over the next 12-months as they feel that housing prices will fall allowing first home buyer to break into the market. However, the sceptics are not sure if these high levels of building will translate into falling property prices, or not.
The Sydney Apartment Glut
The housing price boom in Sydney has seen the median values of housing in the capital rise to just below $1 million. This price for many new home buyers is an unaffordable starting block.
Many industry experts suggest that the reason Sydney home prices have skyrocketed was due to the fact that the capital had an undersupply of housing before 2012. As the general rule of thumb is that when supply is low and demand high, then prices are pushed up.
Home building in Sydney was below 30,000 homes between 2006 to 2012. However, between April 2015 to 2016, housing hit an all-time high with some 70,000 dwellings approved.
It is expected that these elevated levels of building will continue into 2017 and 2018 with many projects that are in the process of being constructed nearing completion. These projects are typically multi-storey unit developments, and there is speculation that these developments will cause an apartment glut in the future. This news is good for first home buyers as prices are anticipated to drop due to supply being greater than demand.
Government Support for First Home Buyers
Home building in Sydney is expected to be concentrated in the citys south-west, western suburbs and the Hills District. A $262 million Housing Acceleration Fund (HAF) has been implemented by the government to support infrastructure in these areas.
According to the NSW state government, the HAF will enable roads to be built, along with bridges, ramps, intersections and traffic signals. This construction will allow Sydneysiders to commute easily from their new homes to work.
However, the NSW government which gave out over $115 million in stamp duty exemptions to first home buyers in the 2015/16 financial year, for new builds or off-the-plan purchases, is winding up its support. During the 2015/16 fiscal year the government expects this support to decline to $96 million, and by 2017/18 it will wind down to $88 million.
Other Australian states though are boosting first home buyer grants. Queensland (QLD) will increase its grants by $40 million with its First Home Owners Grant being raised from $15,000 to $20,000. The Northern Territory (NT) will offer stamp duty exemptions of up to $10,000 for first home buyers purchasing an existing home. Plus, South Australia (SA) will offer concessions for off-the-plan apartment purchases until June 2017. This grant is an addition to a first home buyer grant of $15,000, which means that some first home buyers can access over $30,000 in assistance.
How Can First Home Buyers Take Advantage of Possible Property Price Falls?
If you are a first home buyer thats looking to buy, then now is the time to get your finances organised. Investment experts suggest that first home buyers also start to research the market now. Knowing how the market fluctuates will enable you to see when prices dip so that you can benefit from this.
Its also important that you find out about first home buyer grants and any other entitlements, and how you can apply for these. To find out more about your eligibility, visit the state government of where you want to buy property.
For those first home buyers who think that the cost of home buying will be too high, they can look to team up with friends who are also seeking to buy property. This partnership will allow these first home buyers to pool their resources and to purchase a more affordable property in an area close to amenities.
Are you seeking to buy your first home and want to know if eChoice can help you save? If YES, then contact eChoice today. Our friendly staff and experienced mortgage brokers can compare home loan products for you and will guide you through the finance process.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!