How Can First Home Buyers Overcome Housing Affordability Challenges?

The Australian property market has been on the boil for the last few months. Housing prices are breaking records on the back of robust demand and unprecedented monetary and fiscal stimulus. At a time when the property prices are going uphill, market participants have entered into an intriguing debate over whether the housing affordability crisis is becoming more dire in Australia.

While the housing prices are rising precisely, one cannot neglect that Aussies’ purchasing power has also improved dramatically over recent months amid dedicated support from the policymakers.

Prospective homeowners have been able to receive the cheapest fixed-rate mortgages in history via the central bank’s novel term funding facility. Besides, the government’s massive stimulus has been able to prevent several people from losing their jobs, which also contributed to an improvement in overall household incomes.

Government Initiatives to Ease Affordability Concerns

In fact, the housing market may see property price pressures wearing off in the coming months following a raft of housing policies approved by the government in the recently announced budget. The government has lately introduced multiple measures targeted at addressing the housing affordability problem in Australia.

By raising the amount of money Aussies can deposit in the concessionally-taxed first home super saver scheme, the government has bolstered first-time buyers’ ability to get into housing ownership. Besides, the income tax break provided to low- and middle-income workers is anticipated to put more cash in the pockets of individuals following this budget. At the same time, the new Family Home Guarantee scheme has paved the way for single custodial parents to gain homeownership with a minimal deposit.

These policies are expected to spark a return of first-time home buyers to “off-the-plan” property purchases. Besides, the recently announced measures may also give a leg up to the construction and development industry in major cities like Melbourne and Sydney, where first home buyers have been struggling to secure a foothold in property ownership.

Crucial Tips for First-Home Buyers

1. Strategic Planning is Important

With first-home buyers emerging as big-budget winners, there is a high likelihood that such buyers purchase a new home in the near future, through a buyers agent or on their own. While buying that all-important first home seems to be exhilarating, it should be done through a series of smart and thoughtful decisions and effective strategic planning. Home buyers should ponder over several questions in their planning process, including duration of stay, job security, emotional state, local market indicators, down payment, mortgage rates and demand-supply dynamics.

2. Set a Realistic Budget

When the property seekers begin looking for the dream home, it is imperative to set a realistic budget before nailing down other requirements. Estimating the amount of deposit and other house buying costs beforehand would free up the buyers from the financial pressure, enabling them to comfortably take a leap to homeownership with help from a buyers agent.

3. Check Eligibility for Government Support

Once they are clear about their affordability, buyers can organise the finances and turbo-charge their savings to secure a big home deposit. While saving money for a home deposit, they can also check the eligibility for different government grants and rebates available in each state that can provide them with an unprecedented level of support.

4. Get Expert Advice

First-time buyers can also avail the services of a buyers agent in Melbourne, finance or mortgage brokers, who can do the legwork, provide expert advice on a wide array of borrowing options, and guide them through the loan application process.

5. Ponder on Rentvesting

Interestingly, buyers can also enter the property market through rentvesting by purchasing an entry-level property in a region where they may not necessarily wish to stay. They may rather rent it to tenants while continuing to live in an accommodation in a location that better fits their lifestyle.

While buying a new home may appear harder than ever, undertaking appropriate research, consulting a buyer’s agent in Melbourne, and careful planning beforehand can help first home buyers get into their own home sooner than expected. At a time when a number of incentives and grants have been introduced by the government to inspire people to build new houses, Aussies seem to have the best chance of becoming successful buyers.

Source: Kunal Sawhney is the founder and CEO of Kalkine. An accomplished financial professional, he has extensive expertise in equity markets and adopts quantitative and qualitative stock selection practices.

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