Home loan regulators are trying to reduce the number of traditional investors in the property market. This is seeing the number of apartments on the market increasing and it is taking its toll on property prices. For those looking to get into the property market, however, now is shaping-up to be ideal.
The Housing Industry Association suggests that 2016 could be the year of opportunity for those looking to buy their first home, upgrade their existing property or to downsize and reap the rewards. Data the association has collected shows that new home sales have slumped, along with apartment sales.
In addition, investor lending has fallen from 40% of all loans to 31% of all loans during the last quarter of 2015. Given this data, many real estate experts are suggesting that the upward trend of property values in capital cities will become a thing of the past as the market slows.
There are a lot of apartments in Victoria that are ideal for home buyers looking for a bargain. Many of these will be coming onto the market in 2016 and 2017 and will give home buyers a selection of apartments to choose from. Prices are also expected to soften.
Realtors have noticed a significant change in the market since mid-2015. Around this time, there was little housing stock available so buyers were competing and paying more for homes. Since then, buyer activity has fallen and there are more properties available. Now homes are sitting on the market for some time before they sell.
While it is clear that investors are leaving the market, first home buyer activity has not picked-up enough to cover the short-fall. According to the Australian Bureau of Statistics (ABS), first home buyer activity has fallen to an 11-year low to just 14.9% of all owner-occupier home finance.
This, say realtors, is attributed to the lack of government incentives for first home buyers to buy a home. The government have decreased incentives, which used to cover stamp duty costs. Plus, the prices of homes have been climbing-up until just recently.
While investor competition for buying homes has dwindled, the number of owner-occupiers who are seeking to downsize has increased along with foreign investor numbers. So if you’re looking to buy, you may still encounter competition.
According to the ABS, the number of owner-occupiers looking to downsize in Australia was around 21% in 2013-14. This number is expected to grow due to the number of baby boomers and empty nesters continuing to increase. In fact, according to a recent survey of 2000 over 50s, the majority surveyed said that they were seeking to downsize their home.
The Foreign Investment Review Board (FIRB) 2014-15 report on foreign investment states that the number of foreign investment proposals grew strongly. More than 37,300 proposals were received in the real estate sector compared to just over 23,400 in 2013-14. This figure was more than triple 2012-13 levels. Most increases were in the new dwelling sector. Proposed residential real estate investment increased from $34.7 billion during 2013-14 to $60.8 billion in 2014-15.
Smart home buying means researching the market and finding out what represents value for money. Think minimalist, so that you can get your foot in the door of the property market, and then upgrade at a later date.
The key to buying well and within your budget is to make your expectations realistic. This may mean making compromises and being flexible. Look at a property’s potential and if you can make improvements that will make living in the property more enjoyable as well as add value to the property over time.
Lenders also suggest that when working out what you can afford to buy that you push interest rates up by as much as 2%. This way you’ll know that you can afford to pay your loan even if rates rise.
Do you want to know more about home loans? Then contact eChoice today.