John McGrath - First Home Buying During COVID-19
Current as of 27 April 2020
First home buying across Australia was at a 10-year high at the end of last year and that strong trend continued into 2020, with latest figures showing young buyers represented 1 in 3 home purchases across the market in February in every state bar South Australia (yet still strong at 25.5%).
Over the year to February, first home buying rose by almost 20% nationally. The biggest increases in in February occurred in NSW and Queensland; and the state with the highest level of first home buying was Western Australia at an incredible 46.2%, according to new lending figures from the ABS.
Then came Covid-19. An event like this naturally creates a bit of uncertainty but I encourage young buyers to think of their long term future and not be distracted by this short term event.
Buying conditions for first time buyers haven’t been this good in decades.
Covid-19 hasn’t changed that. The only caveat to this is job security. Those who are absolutely sure their job or income won’t be impacted and/or have substantial savings should continue on with their search for a first home.
With the official interest rate at 0.25%, mortgages in the low 2% range and plenty of government assistance to help you save the deposit and pay less stamp duty, Covid-19 shouldn’t be a barrier to buying your first home, if your circumstances allow it.
My advice is to develop good relationships with the top agents in the suburbs you’re interested in, so you’re ready to make an offer when the right property comes up. Keep asking questions to gain market knowledge and watch what prices do over the next few months.
If you’ve successfully applied for the Federal Government’s deposit guarantee, you now have more time to buy your home. You can apply for an extension of another 90 days to get it done. A further 10,000 guarantees under the First Home Loan Deposit Scheme will become available from July 1.
There’s ample scope to take advantage of this scheme and you have more time now to buy. So don’t rush this very important decision. Be crystal clear on your buying criteria and don’t compromise on the things that provide the most value, like aspect, location and access to transport.
Young buyers need to be brave and go against the herd. Covid-19 has spooked some buyers and they’ve retreated to the sidelines to wait this out. This backlogged buyer demand will return to the market as soon as government restrictions are substantially lifted and people feel more certainty.
You might be surprised to learn that a record number of Australians at 10.7 million viewed ads on realestate.com.au during the month of March. This is well up on the previous record set in January at 9.3 million. So, it’s clear that interest in property hasn’t waned.
The use of 3D tours and digital videos has also increased as more agents adopt these marketing tools and more buyers utilise them to decide which properties are worth a private inspection.
The market has an incredible ability to adapt to changed conditions because Australians’ passion for property will always endure. First home buyers should remember this during the Covid-19 period.
See you next week. JM
This article originally appeared in The Real Estate Conversation (April 27, 2020)