Home Buying First homebuyers are back, but they should be careful

First homebuyers are back, but they should be careful


Recent lending data from the Australian Bureau of Statistics (ABS) has reinforced the return of first homebuyers to the Australian market.

According to the data, the number of loans written to first homebuyers rose to 18% in November 2017, for the first time since 2012.

Chief economist at Market Economics Stephen Koukoulas, told Domain that opportunities were improving for first homebuyers who were facing low interest rates, a softer market and better buying conditions.

State initiatives are also coaxing first homebuyers back into the market.

Last year, New South Wales and Victoria abolished stamp duty for first homebuyers buying properties worth up to $650,000 and $600,000. New South Wales also reduced stamp duty on homes between $650,000 and $800,000, and Victoria did the same for the $600,000 to $750,000 range.

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But CoreLogic’s Cameron Kusher, says first homebuyers should exercise caution.

“The most concerning thing for any potential first home buyer in the current New South Wales and Victoria markets should be the lure of entering a market which has been growing rapidly for many years,” Kusher wrote.

Kusher also noted that first homebuyers tend to be more sensitive to changes in interest rates.

“Although rates are currently expected to be on hold until early 2019, the combination of already falling dwelling values and potentially higher mortgage rates in the medium-term, are factors that should raise some alarm bells for potential buyers,” he added.

Kusher concluded that first homebuyers should not jump at the incentives currently available and to wait until prices had finished correcting.

Source: Domain / CoreLogic