Where is the property market headed? Is this the best time to purchase your first home or investment property?

By Navjeet Singh Matta, ASIC Licensed Mortgage Broker also Director- Gain

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Dear Friends,

Hope you are keeping yourself warm in this chilly weather; we have couple of more months of cold weather left before we head to spring in September. Now let’s talk about the climate in the property market! As per the recent RP Data property monitor report, the values of properties have fallen in major cities all across Australia. This is despite RBA efforts to lift the housing market with rate cuts. Home values dropped 1.4 per cent across all capital cities in May and are now down by more than 5 per cent on a year ago. Melbourne was the worst performing city, with residential property values falling 2.7 per cent last month and more than 8 per cent over the year. Sydney, which has proven resilient to the market downturn, also posted a decline. In May, the city’s home values were down 1.2 per cent, resulting in a 3.6 per cent drop over the year. The Brisbane market is showing signs of improving after two years of lacklustre values. Until recently the river city’s home prices were falling most across Australian capital cities but last month they dipped just 0.3 per cent. Adelaide was an exception and outperformed all other capitals with 1.2 per cent rise in May. Perth had a decline of 1.7 per cent, Darwin 2.4, Canberra 1.5 and Hobart 1.2. Much of the weakness in real estate values was in detached housing rather than apartments so it is clear that the market is becoming increasingly price-point driven with stronger performances across more affordable markets, unit values across the combined capitals increased in May and are up by 1.3 per cent over the first five months of the year. On the positive note, the rental demand and the weekly rental return is pretty strong. We get this concern from people that we could also see a crash in the property market, similar to US however the biggest difference I find between US and Australian market is the supply of houses. In Australia we still have shortage of dwellings and there is a huge demand from both prospective tenants and first home buyers, so if you ask my opinion, this is one of the best times to get in the property market as the prices are soft. We all know that we go through cycles in the property market and currently we are going through a lean period however if you look at the low interest rates being offered by the lenders, the return is pretty good whether you are a first home buyer or an investor. If you are looking for a good deal on your home loan, please contact us on 0296763417 or 0412 452 429 and we can find the best deal for you as per your situation, our services are absolutely free.

Recent changes for first home buyers and investors

As you all know the NSW government announced their annual budget and apart of various other changes they have introduced some substantial changes for the first home buyers and second home buyers/ investors. First Home buyers have been significantly affected, especially the ones who are looking to purchase an established property, these changes are coming in effect from 1st October 2012, I have outlined below the changes that are going to take place:

FIRST HOME BUYERS.....If contract of sale is exchanged before 1st October 2012:

People who are buying an established home will get no stamp-duty exemption however will be eligible for the $7,000 grant from the government

People who are buying a brand new or off the plan home will get full stamp-duty exemption upto the value of $500K and partial up to $600K and also will be eligible for the $7,000 grant from the government

FIRST HOME BUYERS.....If contract of sale is exchanged on or after 1st October 2012

People who are buying an established home will get no stamp-duty exemption and also will not be eligible for any government grant.

People who are buying a brand new or off the plan home will get full stamp-duty exemption upto the value of $650K and also will be eligible for the $15,000 grant from the government

SECOND HOME BUYERS/INVESTORS.....If contract of sale is exchanged before 30th June 2012

People who are buying an established home will get no stamp-duty exemption and also will not be eligible for any government grant.

People who are buying a brand new home will be eligible for 25% exemption in stamp duty (for the property to the value of $600K) but no grant. If they are buying off the plan home they will be eligible for full stamp-duty exemption upto the value of $600K of completed home on the other hand they will get a full stamp duty exemption on a land purchase upto the value of $400K (with a view to build in near future)

SECOND HOME BUYERS/INVESTORS.....If contract of sale is exchanged on or after 1st July 2012

From July 1, 2012, a new $5,000 grant will be provided to buyers of new homes, whether off the plan or newly built, with a value up to $650,000 and to buyers of vacant land that is intended to be the site of a new home valued up to $450,000 but the downside is that they will get no stamp-duty exemptions.

I have tried to explain the changes in a simple language however if there is something you want clarification on, please call me or send me an email and I’ll respond immediately. There has been a mixed reaction with these changes. Some are saying that most benefit will go to the developers and builders who will now hike their prices. The first home buyers who wish to buy an established property will lose out on the benefits and may have to wait longer as they now have to come up with more deposit, on the other hand first home buyers who are buying brand-new property now need less deposit than before.

Thank you for reading this article and your continued support, as mentioned before if you are looking for a good deal on your home loan, please contact us at Gain Home Loans, Lvl 1, 15 Flushcombe Rd, Blacktown, Ph: 02 9676 3417 and 0412 452 429 or you can drop me an email at info@gainhomeloans.com.au

Disclaimer: Any advice given in this article does not take into account the personal needs and objectives or financial situation of the reader. The reader should consider the appropriateness of this and seek professional advice before making a decision whether to acquire or continue the products and services mentioned.