The first home buyer market had a bumper year in 2020 due to modest declines in property prices, reduced investor activity, and a range of government incentives. But with those advantages tailing off, how will first home buyers compete in 2021?
Another week, another big bank tipping national property prices are set to boom.
This week it was Westpac’s turn, with their senior economist tipping property prices to increase 10% in 2021 and another 10% in 2022.
This follows AMP predicting a 5-10% property price increase in 2021, and Commonwealth Bank expecting house prices will increase by 9% in 2021 and 7% in 2022.
Meanwhile, auction clearance rates are high – in the 80% plus range, according to CoreLogic.
So is time running out for first home buyers?
Not at all, but it sure won’t get any easier as property prices increase throughout the year.
Furthermore, the federal government’s HomeBuilder scheme is set to finish at the end of March.
The scheme provides buyers with $15,000 grants to build or substantially renovate homes that are generally in the first home buyer price range.
With the above in mind, the REA Insights Property Outlook Report 2021 states that ‘first home buyers are set to moderate in 2021’.
“In 2021, it is unlikely first home buyers will continue to be as active as they were. Prices are moving quickly; investors are coming back and any incentives available to first home buyers are likely to be eased,” the recently released report says.
The REA adds that first home buyers tend to be more active in slower markets when they can take their time.
But with savvy property investors returning to the market, this can add pressure to first home buyers.
“Investors and first home buyers frequently target the same sorts of properties at similar price points,” explains the report.
So what can first home buyers do to compete in 2021?
Rest assured there are a number of strategies first home buyers can employ to crack the property market in 2021.
With competition for properties heating up, it’s important to have your ducks-in-a-row when it comes to finance before you start looking.
This can help you find properties within your price range, identify any additional costs you may not have factored in yet, and make an offer while your preferred property is still available.
It’s also worth noting that the federal government is set to release another 10,000 spots in its First Home Loan Deposit Scheme on July 1, which can help you buy your first home with a deposit of just 5% without having to pay lenders mortgage insurance (LMI).
Another consideration is shifting the focus of your property search – whether that be the location or property type.
For example, house prices are predicted to grow a lot quicker than apartment prices this year.
So if you’re not quite ready to buy just yet, and it appears that properties are rising quickly out of your price range, consider that the apartment market should move more slowly.
Get the ball rolling today
If you’d like to discuss more options when it comes to obtaining finance to pay for your much-anticipated first home, get in touch with us today.
As mentioned above, the more prepared you are when it comes to financing your first home, the less stressful the whole buying process will be.