In his column in Switzer, John McGrath discusses the opportunities rather than the downfalls given to first home buyers. Particularly timely given the recent “smashed avocado” debate for why first homebuyers can’t afford to get into the market.
Here’s what he had to say:
With first home buying across Australia at its lowest level in more than a decade, I want to encourage young people to re-think their position and look into the grants and stamp duty concessions available to them today.
Every single state and territory in Australia is currently offering assistance to first home buyers – and not just on new property purchases either.
Every now and then the rules change and young people need to keep abreast of these changes so they can best take advantage of them.
For example, did you know the Queensland Government has introduced a $5,000 boost to their First Home Owners’ Grant for this financial year only?
This is a one-off, one-year boost to the grant from $15,000 to $20,000 that will end on June 30, 2017.
While it’s true that all grants are limited to newly-built, off-the-plan or substantially renovated properties, some stamp duty concessions apply to both new and established homes.
It’s really worth taking the time to check out exactly what assistance is available to you, especially with interest rates at such record lows and likely to stay this way indefinitely.
If you put these two factors together, motivated first home buyers can do very well right now.
Although affordability is a big hurdle in cities like Sydney, I see a major opportunity ahead for young buyers in prime east coast markets.
That opportunity is the impending oversupply of new apartment stock in Melbourne, Brisbane and to a slightly lesser extent, Sydney.
Where a market is oversupplied, prices fall.
It’s that simple and that means opportunities for buyers.
The impending apartment oversupply means first home buyers will be able to:
Buy for a better price
Have more negotiating power
Have more choice of property available to them
Have more time on their side to choose their next home
Get tens of thousands of dollars in grants and duty concessions to assist them
Now, a few words of caution when buying in an oversupplied market:
You have to be careful in your choice of location. Pick a desirable area close to amenities with easy access to major employment hubs. Once the oversupply has been absorbed (which might take a few years), prices will begin rising again in good quality suburbs.
Be careful in your choice of product. Focus on good quality developments and choose an apartment that has some unique features, such as a particularly large floor plan, generous balconies or courtyards, great privacy, views or a north aspect. Avoid small uninspiring apartments in developments where every property is the same.
Shop around for finance. Some lenders are avoiding certain postcodes (primarily central CBD areas) not because they’re bad areas to buy in, but because the oversupply creates too much short-term risk for the banks. So you’ll need to talk to a broker to find out which lenders are appropriate for you if you want to buy in these areas.
Buy for the long term. I can’t stress this enough. The oversupply will take some time to run its course. Don’t put yourself in a situation where you need to sell during the oversupply period. Oversupplies are only advantageous to buyers.
Here is a brief overview of the grants and stamp duty concessions available in WA, for more comprehensive information click here.
Name: First Home Owner Grant
Eligible price point: $750,000 cap on properties south of the 26th parallel (i.e. Perth metropolitan areas) and $1 million cap on homes north of the 26th parallel
Eligible properties: New homes
Stamp duty concessions
Name: First Home Owner Rate of Duty
Eligible price point: $530,000 or less
Eligible properties: All properties
Amount: Stamp duty exempt on homes worth $430,000 or less.
Sliding scale of concessions on homes valued $431,000 – $530,000
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