First Home Buying Soars | McGrath

First Home Buying Soars

John McGrath
John McGrath
02/03/2020 | 4 MIN READ

First home buyer activity across Australia is at its highest level in a decade, with more financial assistance available than ever before and the lowest interest rates since the 1950s making the dream of first home ownership possible for more than 103,000 young buyers over the past year. 


According to latest ABS data, the number of new loans issued to first time buyers in December was at its highest level since December 2009. 


The figures also showed that first home buyers were borrowing more, with the average loan size up by about $50,000 year-on-year, indicating APRA’s loosening of loan criteria in July and falling interest rates in June, July and October has given young people a bit more borrowing power.  


Many first home buyers also have access to an additional source of funding that other buyers don’t, the ‘bank of mum and dad’.  Parents are increasingly providing help with the deposit or guaranteeing loans for their kids. Some are buying with their children for investment purposes. 


First home buying has been boosted again this year by the First Home Loan Deposit Scheme, which allows buyers to purchase with a 5% deposit and a federal government guarantee on the rest of the 20%. Around 6,500 of the initial 10,000 guarantees released in January have already been taken up. 


About 1,100 of them are reportedly for young buyers in Sydney. However, it’s not easy to find a new home under the Sydney purchase cap of $700,000, so a bit of FOMO is re-emerging in the more affordable areas of the city where competition has increased and stock levels remain stubbornly low for now. 


The fact that another 10,000 guarantees will be released in July is adding to today’s FOMO, too. 


The lowest home loan interest rates since the 1950s make this an incredible time to take out your first loan. Rates might go even lower this year to support our economy through the impact of the bushfires and coronavirus so, as always, I recommend taking a variable rate over fixed. 


On top of the Loan Deposit Scheme are state government stamp duty concessions and First Home Owners Grants available across the East Coast in varying forms. Here are the details to remind you. 



No stamp duty payable on new or established first homes up to $650,000, with concessions available up to $800,000. There is also a $10,000 FHOG if you buy land to build your first home worth up to $750,000; or buy a new house or off-the-plan apartment worth up to $600,000. 


No stamp duty payable on loans up to 600,000, with concessions available up to $750,000. There is a $10,000 FHOG if you build or buy a new property in Melbourne worth up to $750,000; and a $20,000 FHOG if you build or buy in regional VIC by June 30 this year.  


No stamp duty payable on first home purchases under $500,000. There is a FHOG of $15,000 if you build or buy a new property worth up to $750,000. 

Latest figures indicate that a national price recovery is underway, so it’s inevitable that affordability will become an issue for young buyers again, mainly in Sydney and Melbourne, in the near future. 
Young buyers who recognise the opportunity available today and leverage all the financial assistance currently available will do very well for themselves.  


See you next week. JM


Other buying a house or apartment tools and information

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This article originally appeared in The Real Estate Conversation (March 2, 2020)


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