Finding your sense of direction in Australia’s property landscape is usually the first step towards taking advantage of it.
The last 18 months have seen new patterns of behaviour emerge in the property sector, but first home buyers might struggle to make sense of them.
Two Red Shoes’ Rebecca Jarrett-Dalton said that the resurgence in auctions created some difficulties for first home buyers.
“Auctions are back in strength, which is challenging for our first home buyers,” she said.
While the first home loan deposit scheme has helped some newcomers make their way into the market, Ms Jarrett-Dalton said that the effectiveness of the scheme has been limited by supply and its own overwhelming popularity.
“The first home loan deposit scheme has been snapped up really fast this time around,” she said.
Both it and the family guarantee scheme have proven to be more and more popular as the market continues to rise, Ms Jarrett-Dalton said.
“Buyers know they can’t ‘outsave’ the price rises,” she said.
Another trend she noted is a shift in where owner-occupiers are looking.
The conditions of the pandemic and the rise of remote working conditions have led many first home buyers to consider regions or suburbs they’d otherwise overlook.
“Lots of our FHBs are open to moving dramatically with the aid of COVID-19, working from home and price changes,” she revealed.
Ms Jarrett-Dalton noted that while many are looking to lock in lower fixed rate mortgages, other borrowers have chosen a different course: paying at the rate they anticipate will come with the future.
“Our savvy borrowers are still paying at the higher rate they anticipate to come off onto, which builds in capacity and a buffer for emergencies,” she said.
When it comes to helping first home buyers navigate the property landscape, Ms Jarrett-Dalton deferred to the classics.
“Save, save, save! Reduce your debts and expenses and buy as much as you can comfortably afford so as not to have to change over the house in the future,” she said.
As for how first home buyers can play to their strengths, she recommended thinking outside the square.
“If there is no stamp duty to $650,000 — but very little at $655,000 knock out the competition who are fixated on the lower level and buy the home. The same is true at other prices,” she said.
Being open to all your options can also be a way forward.
Many first home buyers want to do it on their own, “but when they learn about the guarantees and benefits, they often enlist their parents’ help”, Ms Jarrett-Dalton said.
Jameson Capital director Nick Browne advocated for a similarly savvy approach to the market.
For those looking to make the most of their initial jump into Australia’s property, he said that there’s a clear dichotomy when it comes to identifying favourable opportunities and investing in the current market: those who chase trends and those who find them.
“If there are plenty of others pursuing the same opportunity set, it could provide confirmation that the sector or theme may have the characteristics of a desirable trade,” he said.
However, Mr Browne added that the popularity of a sector or theme could also mean substantial competition among those looking to take advantage of it.
“The only way now to continue to outperform is to continually aim to vector in on new inefficiencies, exploit them while they exist, then move on when everyone else arrives,” he explained.
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Article reproduced from nestegg