Timing It Right: Is It The Best Time To Buy A Home In Australia Right Now?

Is It The Best Time To Buy A Home In Australia Right Now

The Australian housing market is booming. House prices are steadily rising, house purchases are up and forecasts estimate the price increase is set to continue into 2022. In a study by Finder, two thirds of Australians said they thought it is a good time to buy a property. As the economy slowly resumes, buyer confidence in the housing market has rebounded. The survey also found that 44 percent of Australians expect property prices to ‘somewhat increase.’ Those thinking of moving to Australia and looking to buy a home there may be wondering whether it is the best time to do so. While there’s no perfect time to buy a home in the market, there are a few telling signs homebuyers should consider when deciding whether to buy or wait.

Tight Housing Stock Means Stiff Competition And Further Drives To Housing Prices

With demand for houses high, housing finance options flowing, and a tight supply of houses on the market, competition is stiff. Other key indicators like buyer confidence, supply indicators, and property values all point to a continued upcycle in the property market. For a buyer, you need to be ready to bid on a property quickly or risk it being snapped up. Supply is also scarce, which means the housing inventory on the market may not be what you’re looking for.

Government Incentives And Policies Making It Easier For Owner Occupiers And First Time Buyers 

While the housing prices are rising, the number of buying incentives and grants aimed at helping homebuyers are also increasing. If you cannot find your dream home on the market and prefer to build a home, the government has extended its Homebuilders Grant Program. Administered as a one-off payment, the grant is now set to $15, 000 (between June and December 2020 it was $25,000). However, you are required to satisfy certain conditions, such as starting construction within 6 months of signing the contract. There are also property value limits set for different regions. In Victoria, it is set at $850,000, while properties in NSW must not exceed $950,000.

First-time buyers can also benefit from the First Time Home Loan Deposit Scheme, which allows first-time homebuyers with a less than 20 percent deposit to secure a home loan without spending thousands on Lenders Mortgage Insurance. The Government has recently added 10,000 places to the scheme, set to be released in July. The record-low interest rates are also a great bonus for buyers on the market right now. In February 2020, home loan interest rates fell to 1.69 percent. This presents an opportunity for huge cost savings if buyers can fix all or part of their home loan to decrease the overall cost of home financing they end up paying. For current homeowners, this is another common mortgage mistake that adds to costs – not reviewing their home loans at regular intervals.

Rising Home Prices Makes Affordability Tough Despite Low Interest Rates

However, there is also the issue of saving a home down payment to get on the property ladder. The rising market prices mean the deposits needed are also rising. Even with record low-interest rates, housing remains out of reach for many, thanks to a widening gap between income and home prices. Generally, low-interest rates would indicate a great time to buy.

However, recent reports have shown that more than half of homebuyers in Australia are relying on the Bank of Mom and Dad to afford a deposit on a property. In a study by DFA, over 60 percent of participants said they had help from their parents to put a deposit down on a property. Therefore, even though the number of house purchases and first-time buyers is rapidly rising, the truth behind those transactions is that they have had help. Sadly, that is the reality of the difficulties people face to get into the homeownership market – even with record low interest rates.

So is it the perfect time to buy a home in Australia? Well, again, there is no perfect time. What is certain, however, is that home buyers should not only focus on timing their purchase right, but also on getting themselves in the best position financially before taking that step. Building up a good credit profile, solid savings account, and secure income streams are universal steps you can take to give yourself the best chance.