Invest
Why ‘purchasing properties for very little’ could still have a slow uptake
Invest
Why ‘purchasing properties for very little’ could still have a slow uptake
While the budget has been flagged as a win for first home buyers, a property researcher explains why the uptick in first home buyers might actually be slower than first anticipated.

Why ‘purchasing properties for very little’ could still have a slow uptake
While the budget has been flagged as a win for first home buyers, a property researcher explains why the uptick in first home buyers might actually be slower than first anticipated.

An extra 10,000 first home buyers will be able to purchase with deposits as low as 5 per cent under an extension to the federal government’s First Home Loan Deposit Scheme.
But unlike the original, the extension only applies to newly built homes that will come at a higher price compared with those who benefited from the scheme a year ago.
This is designed to help the construction sector as the government looks to stimulate the economy post COVID-19 restrictions.
In his budget address on 6 October, Treasurer Josh Frydenberg announced that he is tweaking the scheme, with eligible first home buyers now able to use it for homes purchased between 6 October to 30 June 2021.
As with the original phase of the scheme, eligible first home buyers will be able to purchase a home with a deposit as low as 5 per cent of the purchase price, as the federal government will guarantee up to 15 per cent of the loan.
But this time around, successful applicants will be able to buy newly built homes worth up to $950,000 in Sydney; $850,000 in Melbourne; $650,000 in Brisbane, and $550,000 in Perth.
Due to the higher costs associated with new builds, InvestorKit’s head of research Arjun Paliwal believes the new scheme could be slower to pick up than the original.
“I believe first home buyers are the winners [from the budget], but it’s important to note it has been limited to newer builds, which makes sense for the construction industry that needs support,” Mr Paliwal said.
“But it will be interesting to see the take-up of this versus the speed of take-up of the last few 10,000 placements.”
While pointing to distance to where a new building has to be built from the CBD as well as an additional cost, Mr Paliwal believes this could be an opportunity for first home buyers.
“Surrounding the scheme are all these grants that are putting investors in a position where they could be paying very little,” Mr Paliwal said.
“In this circumstance, it may enable someone to purchase a property with close to no money now.
“If you think about a $650,000 new build in, say, the Central Coast as an example, a 5 per cent deposit is $32,500.
“If they are getting a $10,000 new build grant, it’s $22,500. But then they also don’t pay stamp duty as a first home buyer.”
“So, 22,500 for many people that have been saving for years would be in a position to make this transaction from a cash perspective happen.
“So, I think it does help a lot of people when you combine all the schemes, but it will limit them to locations unfortunately,” Mr Paliwal concluded.
About the author

About the author


Property
RBA’s 30% property growth forecast to materialise in 75% of regions
Experts believe that RBA’s forecasted 30 per cent growth in property prices over the next three years will materialise in 75 per cent of Aussie regions. ...Read more

Property
HomeBuilder applications soar as first-timers enter the market in record numbers
Record numbers of first home buyers are coming into the market assisted by the government’s HomeBuilder stimulus, which is expected to help spur $50 billion in economic activity. ...Read more

Property
Dual Occupancy Homes – Why They Are A Smart Investment In The Current Market
Promoted by Metricon ...Read more

Property
4 factors affecting property market trends in 2021
Following a tough 2020, property investment activity is expected to rebound strong, expanding by 50 per cent in the second half of 2021. ...Read more

Property
House prices tipped to surge 30% on the back of cheap money
According to new documents released from the Reserve Bank of Australia, persistently low interest rates could push up property prices by as much as 30 per cent. ...Read more

Property
Double-digit price growth to stick around as ‘property boom’ arrives
According to leading indicators, Australia’s property boom officially began in November, following several slow months on the back of the COVID crisis, with double-digit price growth already logged ...Read more

Property
How to turn your ‘costly’ lifestyle investment into a money-making asset
Emotionally driven holiday home buyers are being advised to seek maximum rental income and depreciation benefits to make their investments viable. ...Read more

Property
Dutch e-commerce giant VidaXL ramping up Australian operations
Netherlands-based online retailer VidaXL is ramping up its operations in Australia, by launching the build of a brand new 81,000 sq m national distribution centre in Melbourne. ...Read more

Property
RBA’s 30% property growth forecast to materialise in 75% of regions
Experts believe that RBA’s forecasted 30 per cent growth in property prices over the next three years will materialise in 75 per cent of Aussie regions. ...Read more

Property
HomeBuilder applications soar as first-timers enter the market in record numbers
Record numbers of first home buyers are coming into the market assisted by the government’s HomeBuilder stimulus, which is expected to help spur $50 billion in economic activity. ...Read more

Property
Dual Occupancy Homes – Why They Are A Smart Investment In The Current Market
Promoted by Metricon ...Read more

Property
4 factors affecting property market trends in 2021
Following a tough 2020, property investment activity is expected to rebound strong, expanding by 50 per cent in the second half of 2021. ...Read more

Property
House prices tipped to surge 30% on the back of cheap money
According to new documents released from the Reserve Bank of Australia, persistently low interest rates could push up property prices by as much as 30 per cent. ...Read more

Property
Double-digit price growth to stick around as ‘property boom’ arrives
According to leading indicators, Australia’s property boom officially began in November, following several slow months on the back of the COVID crisis, with double-digit price growth already logged ...Read more

Property
How to turn your ‘costly’ lifestyle investment into a money-making asset
Emotionally driven holiday home buyers are being advised to seek maximum rental income and depreciation benefits to make their investments viable. ...Read more

Property
Dutch e-commerce giant VidaXL ramping up Australian operations
Netherlands-based online retailer VidaXL is ramping up its operations in Australia, by launching the build of a brand new 81,000 sq m national distribution centre in Melbourne. ...Read more