Market Wrap – First Home Buyers

First home buyers are entering the market with a vengeance, with ABS data revealing the number of first home buyer loans has increased by 13 percent over the 14-15 financial year, despite house prices rising.

Young buyers in Victoria are borrowing on average $338,300 – almost a record – off the back of the slate of interest rate cuts earlier this year. These property first timers are adopting a range of strategies to break into the market. Some are living with parents to save for a deposit, or even asking mum and dad to help with financing their loan.

Then there’s the trend of ‘renvestors’ – youngsters purchasing investment properties in more affordable suburbs but renting in the inner-city close to lifestyle amenities and work. The goal here is to use the appreciation from the investment property as equity when purchasing their ideal home down the track. This strategy isn’t without its pitfalls though.

Young investors aren’t eligible for the first home buyer’s grant or the related stamp duty concessions. Recent APRA changes to investor loans could also mean mortgage approvals for younger buyers will become tougher as those with larger borrowing requirements are often the first to be screened out.

Remember, everyone has their own strategy to get into the property market. But always consider the advantages and risks of the course you take, and how they affect your financial and personal needs before making the jump.

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