The apartment construction boom in Victoria, New South Wales and Queensland is the break that first home buyers have wanted. First of all, property prices are expected to be lower. Secondly, competition with investors is anticipated to be less. Thirdly, many buyers should find property more affordable, so they can get passed deposit saving issues that they have been experiencing.
However, to make the most of the expected increase in apartment numbers, first home buyers will need to buy wisely. Rather than rushing in to purchase off-the-plan apartments, which may cost more long-term, new home buyers are urged to wait.
Younger Buyers are Staying in the Family Home Longer
Research suggests that over the last three decades that the structure of the typical Australian household has changed. Young people, those under 25-years, usually left home at the age of 20-years in the 90s. However, many are now living at home.
Data collected by the Australian Institute of Family Studies indicates that the number of 20 to 24-year-olds living at home has risen. In fact, this figure has jumped by 10 percent over the last 30-years. Furthermore, over the last 20-years, the number of 25 to 29-year-olds living at home has increased by 16 percent.
According to research, the number of younger people staying at home is due to the rising costs. These costs include the price of homes and rents becoming more expensive. Therefore, these factors make it difficult for first time buyers to be able to save enough for a home deposit. Hence, staying at home longer has reduced first home buyer living costs and made living more affordable. This strategy has seen many able to save more towards their home deposit.
Why First Time Buyers Should Buy as Apartments are Completed
There are a number of reasons why first home buyers are urged to buy a completed apartment. Firstly, the number of high-rise apartments reaching completion annually in Brisbane, Sydney and Melbourne is around 50,000. This concentration of property means that there are plenty available. As a result, the Reserve Bank suggest that this may force down prices due to an increase in supply. As supply is currently higher than demand. Therefore, many off-the-plan purchases may fail to settle. Thus, first time buyers may be able to purchase a more affordable property.
Furthermore, the number of apartments built is expected to increase over the next few years. This supply is anticipated to constrict the price growth of these properties and the growth of rental fees. Although not in all markets. So, first home buyers who are now saving to buy a home will have a greater selection. These properties will be at better prices. Plus, competition is also likely to be less, as changes to borrowing regulations have reduced investor buying considerably.
How to Buy the Right Apartment
CoreLogic RPData suggests that apartments in Melbourne, Brisbane, and Canberra are currently selling for less than their off-the-plan price. The Real Estate Institute of Victoria indicates that the median price for one-bedroom units has fallen by $5,000 or 1.4 percent. This decrease takes the median value of these properties to $355,000.
Property investment advisers suggest that while this data sounds gloomy, it makes for the perfect opportunity. Especially, for first time buyers to break into the market. Eventually, the oversupply of apartments will be absorbed by the market. So the trick, say financial advisers, is to choose your suburb wisely.
First time buyers should look for inner city areas that have strong demographics as these are ideal. Also, apartments in smaller blocks are more desirable. These apartments will retain their value and also attract higher rental yields. The key is to think long-term. Buy an apartment thats different to all the others, has greater street appeal, and lower corporate body fees.
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