First Home Buyers Dominating The COVID-19 Property Market | McGrath
First Home Buyers Dominating The COVID-19 Property Market

First Home Buyers Dominating The COVID-19 Property Market

16/07/2020 | 5 MIN READ

First home buyers are dominating the COVID-19 property market, with the number of active first home buyers in the market reaching a decade high.  

The 2020 property market started extremely strongly. In March our national dwelling values were up 7.5%  from the same time last year and consumer sentiment was high. Then came the pandemic, which changed the property landscape almost overnight and presented first home buyers with a unique opportunity to step into the property market. 


Here is a look at 5 key reasons why the COVID-19 property market is proving popular for first home buyers. 


1. Record low home loan interest rates

With record low interest rates, first home buyers have never been better placed to get finance and meet their mortgage repayments.  In addition, demand by investors for loans has dropped significantly, which has the flow on effect that lenders are very keen to talk to first time buyers. 

Many first home buyers who missed out during 2019 when the prices were rising, have most likely saved their deposit, or are close to it, and are in the perfect position to grab an opportunity when it arises. Our team at Oxygen Home Loans would love to talk to you about your financing needs. Connect with them here

2. Government stimulus 

In June, the Federal Government announced a new HomeBuilder scheme which can help add even more money to first home buyer budgets.  This initiative is designed to boost the construction sector, but has the added benefit of supporting first home buyers who are looking to build a new home.  


Historically, the first home buyer grants have proven to be a successful driver of demand and now with the ability to combine it with the HomeBuilder scheme, we anticipate first home buyers, who have stable employment, will continue to drive demand between now and the end of the year. 

3. First Home Loan Deposit Scheme second intake

This is an Australian government funded initiative which partially guarantees some low deposit loans by helping eligible first home buyers avoid paying lenders mortgage insurance. 


If a first-time buyer has less than 20% deposit, they will normally be required to pay lenders mortgage insurance which can be quite hefty.  However, under this scheme, eligible first home buyers can purchase a modest home, with a deposit as little as 5% (lenders criteria applies) and the Commonwealth Government will guarantee the difference between what the first home buyer has saved and the 20% deposit threshold lenders usually require before they’ll provide a loan without lenders mortgage insurance. The government says this could save first home buyers as much as $10,000.

The property price threshold varies depending on where you are buying. To find out the property price caps for the area you wish to buy in click here.  

10,000 guaranteed loans were offered from 1 January 2020 and these were snapped up quickly.  As of 1 July 2020, another 10,000 eligible first home buyers will be able to benefit from this.  To find out more about applying for this program click here.

4. Less competition from investors 

Traditionally, reasonably priced properties around the city fringe areas are hotly contested by both investors and first home buyers.  However, with international borders closed, moratorium on rents, and many renters opting or being forced to move home to mum and dad during the COVID-19 period, investors have been pulled out of the market.


Combine this with the fact that first home buyers, who may have been renters until recently, are looking at getting into the market. This has the potential to further reduce rental demand and increase vacancy rates.  All of these factors have spooked many investors and have led to reduced investor interest in purchasing residential properties.

The upside for first home buyers, is less demand from investors means property pricing is less likely to be pushed up and therefore it may be a good time to buy. 

5. First home buyer grants

Each state and territory offer a first homeowner grant as a way to encourage and assist home ownership across the country.  The size of the grant and the eligibility criteria varies, but in most places, it applies to first time property owners who are either purchasing an existing home that has never been lived in, or building an entirely new home. 


Government benefits for first home buyers constantly change, make sure you check the website of the Office of State revenue in your State or Territory for the most up to date information.

New South Wales
Australian Capital Territory
South Australia
Western Australia
Northern Territory

A final word

Regardless of the state of the economy or whether we are in the middle of a pandemic or not, a property purchase is probably the biggest financial commitment of your life.  As a first-time buyer make sure you do your own extensive research and weigh up your options before you commit to a 30-year mortgage.  But if you have a stable job, with stable income, what a great time to start when rates are low, banks want your business and the government is offering so many great incentives.

McGrath Limited and its subsidiaries, together with their directors, officers, employees and agents have used their best endeavours to ensure the information passed on in this document is accurate. However, you must make your own enquiries in relation to the information contained in this document and seek advice from your financial advisor, broker or accountant to ascertain its application to your circumstances. 

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