There’s been plenty of talk about Australia’s property boom in 2021. Interest rates are lower than we have seen in a long time, auction clearance rates are through the roof and many eager buyers are ready to empty their wallets.
What does this mean for first home buyers?
Thanks to incentives introduced by federal and state governments, we’ve not only seen a property boom, but also a first home buyer boom. The number of first home buyers in the market is now higher than we’ve seen since 2009. Rock bottom interest rates have also played a massive role in housing affordability for first home buyers. However, with prices continually increasing, first-home buyers struggle to compete with those who are buying and selling in the same market.
CommBank’s head of economics, Gareth Aird recently predicted that house prices will increase by 9% in 2021 and 7% in 2022. Surging house prices and the wrap up of first home buyer incentives at the end of the financial year may mean a short-lived first home buyer boom. With interest rates not expected to further reduce, many first home buyers may have missed the boat purchasing their dream home in 2021.
Tips for first home buyers
If you’re still keen to break into the property market, there are plenty of options to consider. With less demand for inner-city apartments and a weak rental market, purchasing an apartment could be a stepping stone to eventually purchasing the dream home once the property boom has settled.
It is important to note that although property prices are on the rise, not all areas are experiencing the same levels of growth. With remote work becoming normalised even after COVID-19 restrictions have eased, first home buyers may choose to consider purchasing outside of expensive metro areas. Alternatively, ‘rentvesting’ could be a great way to get into the market. This involves purchasing property in an affordable area while continuing to rent in an area where you want to live.
If you need help securing a home loan, APS Benefits offers Home Loans and a free Mortgage Broking service to help you every step of the way.
Save until the market settles
If you decide to hold on to plans to enter the property market, you can always focus on saving and building a strong deposit until prices start to level out. You may consider locking your savings in a high-interest term investment, allowing you to purchase a home that you really love in a few years.
For example, If you chose to put $50,000 into an APS 24-month term investment with an interest rate of 4%p.a., you would be walking away with a $54,000 deposit without moving a finger. After you add in your monthly savings on top of that, you’re looking at a healthy deposit that will put you in a better position to purchase when the property boom eventually comes to end. Click here to learn more about building your savings with APS term investments.