First-home buyers are more confident than they were a year ago, a Westpac report has found. Kelli Schleibs and Jim Needham are looking for their first home. Picture: Sarah Matray
IT’S no secret first-home buyers have faced big hurdles entering the market in the past few years.
But now, many are feeling more optimistic and determined, an exclusive report has revealed.
Three in five Australian first-home buyers feel more positive about the market than they did 12 months ago, according to Westpac’s 2018 Home Ownership Report.
The same proportion feel home ownership is closer now than a year ago, the report surveying 1400 people shows.
RELATED: First-home buyers have a spring in their step in Melbourne property market
First-timer snaps up St Kilda pad as young buyers find their feet
First-home buyers ‘still have to fight it out’ in cooler market
Three in five Australian first-home buyers are feeling more positive about the market now compared to 12 months ago, Westpac’s 2018 Home Ownership Report has revealed.
Westpac head of home ownership Lauren Fine said the surge in first-home buyer confidence and positivity wasn’t surprising given the softening of the market, driven mostly by Sydney and Melbourne.
“It’s suddenly helped them realise there is actually a potential opportunity to get into the market,” she said. “If you consider they’ve been shut out for so long, it’s great to see them finding their own voice.”
A majority of Victorian first-home buyers were also more optimistic, but might feel more of a challenge than their interstate counterparts.
Here, 52 per cent feel more positive than a year ago, 10 per cent down on the national figure, and 57 per cent feel home ownership is closer, according to the report.
But Victorians were also more determined, outperforming all the other states in their willingness to make sacrifices, in taking up extra income, and in using digital resources to help themselves get ahead.
And as experts reveal, while there are still considerable challenges for Victorian first-home buyers, there are things to be positive about — and even factors in first-home buyers’ favour.
■ Don’t aim for your dream home yet. Buy smaller and more affordable first and
aim high later on.
■ Consider paying lender’s mortgage insurance and having a smaller deposit rather than saving for years for a larger deposit.
■ If you can, move in with family or to a cheaper rental to help you save for a deposit.
■ Get pre-approval in writing and make sure you can afford potential mortgage repayments by following a mock budget, setting aside that amount each month.
■ Consider making a strong, unconditional pre-auction offer.
■ Take the emotion out of it by getting someone to negotiate or bid for you.
Source: Frank Valentic
Saving enough money for a deposit and upfront costs is still a big hurdle for first-home buyers.
Saving enough money for a deposit and upfront costs remained a key barrier for first-home buyers, Ms Fine said.
Victorian first-home buyers feel a bigger burden than other states, with 84 per cent concerned about the deposit and upfront costs, compared to 75 per cent nationally.
“They are also the one group more likely than the national average to make compromises across all lifestyle aspects, including holidays, additional sources of income and eating out, in order to save for a first home,” Ms Fine said. She said these figures showed first-home buyers’ determination and resilience.
Stamp duty concessions and government incentives had been a “huge boost” for Victorian first-home buyers since their introduction last July, realestate.com.au chief economist Nerida Conisbee said.
“We know how successful they tend to be in helping people into the market.”
However, banks had tightened the reins on lending.
“The finance situation is a lot tougher now, though it does seem to be impacting first-home buyers a lot less than investors,” Ms Consibee said.
Advantage Property Consulting director Frank Valentic said with the huge increase in assistance for first-home buyers, those with their finance sorted had a good chance to get onto the property ladder. But with tighter lending conditions, they should cut down on spending as much as possible before applying for a loan.
Ms Conisbee said the fact Victorians were slightly less optimistic than other states could be due to strong price growth here in the past five years.
3/34 Barkly St St Kilda sold to a first-home buyer in August.
First-home buyers seeing now as a great time to jump into the market aren’t alone.
“The cheaper end of town is doing quite well because first-home buyers are back,” Ms Conisbee said. She the market for homes below the $750,000 cut off for financial assistance was being boosted by increased first-home buyer activity.
Mr Valentic described this as the market’s strongest segment.
“At villa unit auctions, townhouse auctions, and houses in affordable areas, that’s definitely the strongest part of the market, and we’re seeing first-home buyers there,” he said.
First-home buyers would need to be prepared to “fight it out” at auctions, Mr Valentic said. He said downsizers often competed for the same property types and made a tough match. But an upside was that fewer investors were in the market now.
Parts of Melbourne’s north including Reservoir, Lalor and Glenroy, and from Sunshine to Werribee in the west, have seen solid first-home buyer activity, Mr Valentic said.
5 Amber Court, South Morang sold to a first-home buyer earlier this year.
PRICES AND PRESSURE
Buyers still have to deal with the fact house prices have soared in the past few years.
Mr Valentic said in this “buyers’ market” prices had softened for $1 million-plus property, but there were still “solid” results for good quality units and entry level houses under $750,000.
But the feeling buyers had to act as prices were snowballing out of control had eased.
“There’s definitely been an improved buying environment for them in that they’re not chasing this runaway train,” Mr Valentic said.
Ms Conisbee said compared to 12 months ago, first-home buyers felt less rushed and had more time to consider their decision.
“I think for them, all the factors that have led to a slower market have been a real positive for first-home buyers.”
McGrath St Kilda principal Michael Townsend said the bayside suburb had one of its best first-home buyer markets in years, with a less pressurised feeling for first-home buyers who were “capitalising on some great opportunities”.
He said runaway results had given way to “fair” prices for both buyers and sellers.
“Around 12 to 18 months ago there were a lot of dejected first-home buyers expecting to buy a property in the price range or a bit above, only for it to blow out at auction,” he said. “We’re not seeing that at the moment — we’re seeing confident first-home buyers who research and understand where a property may or may not sell.”
THE TOOLS AND TIPS
Victorians top the states for digital research, according to the report, with 69 per cent using digital resources to better understand what financing and buying a home involves.
Ms Fine said it was essential buyers broke down all the money involved such as fees and moving and renovation costs. She said Westpac had launched a new Home Saver Calculator to help understand how long it could take to save a deposit, plus explore options like parental guarantee or lender’s mortgage insurance to help get in sooner.
Mr Townsend said buyers should get an idea of what their money was worth by keeping an eye on sales and taking time to research the market.
“Take your time. It doesn’t need to be that you’ve got pre-approval and the money starts burning a hole in your pocket and off you run,” he said. “And even before you start that process, go out and see properties and what they sell for.”
First-home buyers Kelli Schleibs and partner Jim Needham have moved in with Kelli’s parents and feel this year is the ideal time for them to look for their first home. Picture: Sarah Matray
PATIENCE AND A KEEN EYE THE KEY
For Jim Needham and Kelli Schleibs, now is shaping up as a better time than ever to buy their first home.
“We’ve had an idea that we want to buy a home and have been keeping an eye on the market for the past six or nine months,” Mr Needham said.
“We’re now in the position that we can start thinking about buying seriously soon.”
The pair, both 26, are hunting for a house around Greensborough and Watsonia.
And because they were seeing “more of a buyers’ market” and had both taken on new roles in their careers, they felt like their goal was in sight, Mr Needham said.
“When we first started thinking about it 12 months ago, I would have ruled it out because of reading and hearing about how expensive things were basically,” he said. “But we noticed it starting to slow down a bit and realised wow, we might be able to pull enough money together.”
Mr Needham and Ms Schleibs have been pre-approved for a home loan, and have bid at an auction but not yet been successful. They’re doing their research and looking for more opportunities.
“We spend probably two or three hours a week going to inspections, reading up about how the market’s going and what the trends are,” Mr Needham said.
And after moving in with Ms Schleibs’ family, Mr Needham said the couple had still been able to travel through good budgeting, and didn’t feel the pressure of a time limit to rush in and buy just anything.
“If it’s three, six or 12 months — there’s no real urgency — but if something comes up and we love it and we can afford it, we’ll go for it,” he said.