Is 2018 The Year Of The First Home Buyer?
Could 2018 be the year of the first home buyer?
Supply and affordability are still an issue in many areas across Sydney, but it seems the tide could be turning. Here are some of the key factors at work in the market.
First home buyer demand on the increase
According to January figures from CoreLogic, demand for finance from first home buyers across NSW and Victoria has been on the increase since around October last year. Demand is still far less than that seen from non-first home buyers and investors, but the increase is significant—it comes after almost six years of little change for first home buyers in these two key states.
Concessions, discounts and grants having an impact
The NSW government has put a number of policies in place over the past year to try to make breaking into the property market that much easier, including:
- abolishing stamp duty on homes valued up to $650,000
- offering stamp duty concessions for homes valued up to $800,000
- providing a $10,000 grant for people building new homes valued up to $750,000 and people buying new homes valued up to $600,000.
The concessions could be having some effect already. According to a February statement from NSW Premier Gladys Berejiklian, 5,400 more first home buyers have entered the state’s housing market since these changes we introduced. And that may not be the end of the changes, with the Housing Institute of Australia still advocating for discounts to apply to a wider price bracket.
Why 2018 won’t be the year of the overseas investor
The influence of investors on the NSW housing market has been a concern for first home buyers, but they are also in the government’s sights. Higher charges now applied to foreign investors looking to buy in NSW – a doubled stamp duty of 8% and a 2% land tax. The option for investors to defer stamp duty on off-the-plan purchases has also been abolished. Banks are tightening their lending criteria, while it’s becoming harder for potential investors to get money out some countries like China.
Affordability remains a key issue across NSW
While the government’s boosts for first home buyers and tighter controls on investors may be having some impact, it’s clear NSW residents will keep pushing for improvements to make entering the housing market even easier. According to new research from the Grattan Institute, NSW residents see housing affordability as one of the top three issues for the current government, second only to the health system and above unemployment.
The emerging trend towards first time buyer activity is obviously good news for those planning to break into the market. And more buyer activity is also good news for sellers, particularly in markets where first home buyers may have been unable to even consider buying until these changes came into effect.
Time will tell whether the trend continues, but the start of 2018 looks more promising for first time buyers.