The impact of the Australian property market on first home buyers

The Australian property market has been a topic of discussion for quite some time now, especially in relation to its impact on first home buyers. For many Australians, buying their first home is a significant milestone and a major financial decision. However, the current state of the property market has made it challenging for many first home buyers to enter the market. In this article, we'll explore the impact of the Australian property market on first home buyers and share some tips and insights to help them navigate the market.

Firstly, let's look at the current state of the Australian property market. Over the last decade, the property market in Australia has experienced significant growth, with property prices in some cities and regions skyrocketing. This has been fueled by various factors such as low-interest rates, a growing population, limited housing supply, and high demand from both local and international buyers.

While this growth has been good news for property investors, it has made it increasingly difficult for first home buyers to enter the market. With property prices continuing to rise, many first home buyers are struggling to save enough money for a deposit and are finding it challenging to secure a home loan.

According to data from the Australian Bureau of Statistics, the proportion of first home buyers in the market has been declining over the years. In 2012, first home buyers accounted for around 20% of all new loans, while in 2020, this figure dropped to just 13.4%. This trend is a worrying sign that the dream of homeownership is becoming less achievable for many Australians. Add in 10 consecutive interest rate rises (as of April 2023), with more on the horizon and the outlook might seem bleak for most.

Is it all doom and gloom for Aussie first home buyers?

So, what can first home buyers do to navigate the challenging property market? Here are some tips and insights that may be helpful:

1. Research the market: Before entering the property market, it's crucial to do your research. Understand the different types of properties available, their locations, and their prices. This will help you determine what you can afford and where you should focus your search.

2. Save for a deposit: Saving for a deposit is one of the biggest challenges for first home buyers. However, with some careful budgeting and financial planning, it's possible to save enough money for a deposit. Consider using a high-interest savings account, and look for ways to reduce your expenses, such as cutting back on unnecessary expenses or negotiating better deals on bills.

3. Consider government incentives: The Australian government offers various incentives to help first home buyers enter the property market. For example, the First Home Owner Grant provides a one-off payment to eligible first home buyers, while the First Home Loan Deposit Scheme can help first home buyers secure a home loan with a deposit as low as 5%.

4. Get pre-approved for a home loan: Getting pre-approved for a home loan can help you understand how much you can borrow and what your repayments will be. This can give you a better idea of what you can afford and help you make a more informed decision when it comes to buying a property.

5. Consider alternative options: If buying a property is not feasible right now, consider alternative options such as renting, co-buying with friends or family, or investing in property through a property trust or REIT.

In conclusion, the impact of the Australian property market on first home buyers has been significant, with rising property prices and limited housing supply making it challenging for many Australians to enter the market. However, with some careful research, planning, and consideration of government incentives and alternative options, first home buyers can still achieve their dream of homeownership. As a mortgage broker, it's my job to provide my clients with the right guidance and support to navigate the market successfully and achieve their property goals.?

I hope these insights into the Australian property market and its impact on first home buyers have provided valuable information for your home buying journey. If you require further guidance and support in navigating your mortgage, feel free to book a complimentary call with me by clicking here.

Disclaimer: The content in my articles is for informational and educational purposes only and provides general information. It should not be considered as personal financial advice. It is important to evaluate your specific circumstances and seek advice from financial and legal experts before making any financial decisions.