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
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. ...Read more
Property
Labor’s ‘Help to Buy’ scheme not without its risks
With Anthony Albanese sworn in as Australia’s 31st PM, home buyers are excited at the prospect of accessing the new ‘Help to Buy’ scheme, but a property expert has warned that the risks may be g...Read more
Property
Australia's housing market is entering a ‘broad-based correction phase’
Westpac believes the housing market downturn is now underway. ...Read more
Property
ANZ now expects house prices will end the year lower
With higher interest rates on the horizon, the bank is forecasting larger house price declines than previously expected. ...Read more
Property
Which capital cities are most attractive to property investors?
A new survey has suggested that investor attention is shifting away from Australia’s two largest capital cities. ...Read more
Property
Market uncertainty fails to discourage foreign property investors
While interest from foreign investors in Australian property has remained strong, HLB Mann Judd warned that tax increases could see demand shift to other markets. ...Read more
Property
Regional renters forced to spend more of their income than ever before
Renters in regional areas are spending nearly as much on rent as home owners are spending on mortgage repayments. ...Read more
Property
Aussie home buyers now need to save for over 11 years for a deposit
Since early 2020, the time needed to save for a deposit has increased by more than two years. ...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. ...Read more
Property
Labor’s ‘Help to Buy’ scheme not without its risks
With Anthony Albanese sworn in as Australia’s 31st PM, home buyers are excited at the prospect of accessing the new ‘Help to Buy’ scheme, but a property expert has warned that the risks may be g...Read more
Property
Australia's housing market is entering a ‘broad-based correction phase’
Westpac believes the housing market downturn is now underway. ...Read more
Property
ANZ now expects house prices will end the year lower
With higher interest rates on the horizon, the bank is forecasting larger house price declines than previously expected. ...Read more
Property
Which capital cities are most attractive to property investors?
A new survey has suggested that investor attention is shifting away from Australia’s two largest capital cities. ...Read more
Property
Market uncertainty fails to discourage foreign property investors
While interest from foreign investors in Australian property has remained strong, HLB Mann Judd warned that tax increases could see demand shift to other markets. ...Read more
Property
Regional renters forced to spend more of their income than ever before
Renters in regional areas are spending nearly as much on rent as home owners are spending on mortgage repayments. ...Read more
Property
Aussie home buyers now need to save for over 11 years for a deposit
Since early 2020, the time needed to save for a deposit has increased by more than two years. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
