First Homebuyers in Australia and Their Hurdles in Buying Property

Buying your first property is a beautiful and exciting thing. Wherever you are in the world, finding a place to call your own is definitely a dream come true. Unfortunately, there are many challenges that potential buyers are facing right now.

A recent property market analysis has shown that the property downturn has little to no effect on the skyrocketing required deposit to purchase a residential property. The research has further revealed that instead of buyers being disheartened to buy property because they cannot afford the deposit, many are still choosing to buy a small one even in a falling property market, which could cause them to encounter even more problems.

Major markets such as Sydney and Melbourne are experiencing falls of 6 percent from their peak. And with median houses requiring a 20 percent deposit, even properties in affordable cities are experiencing decreases due to affordability issues. For instance, in Brisbane, a deposit of $162,000 is needed to acquire the property, and about $129,000 in Perth.

The property figures exclude transaction costs and stamp duty. For NSW first-time home buyers, while they now have the option to pay an annual land tax instead of the previous stamp duty, which will allow them to reduce the amount that they need to save in order to buy their home, the deposit remains high, and that is a hurdle for far too many people.

Monthly Mortgage Repayments
One other hurdle that first homebuyers are facing is the rising monthly mortgage repayments. The Reserve Bank has increased the cash rate to tame inflation in the country. The Australian Bureau of Statistics has revealed that first-home buyers experienced a 26 percent value of loans in the year to September. The amount of money most first-home buyers are required to save is still onerous, according to AMP Capital Chief Shane Oliver. Meaning it's still a challenge that many will have to face. This situation was not the case for Baby Boomers and Generation X. Even with high-interest rates, they did not have to deal with sky-high property prices, so the matter with deposits was not as problematic.

Potential buyers and alternatives
Investing in a falling market may result in negative equity, meaning investors may owe more on their home loan than on how much their property investment is worth. Some people are looking into other alternatives. Experts suggest that low-deposit buyers should look for properties that are well-established. They really should choose properties in good locations instead of going for off-the-plan or house and land packages.

They must have enough information about the state and federal government initiatives in order to fully enjoy the benefits. These will make a lot of difference in terms of preparing for requirements and saving up for the deposit.
Lastly, experts also warn first home buyers about getting into Sydney and Melbourne markets as it could be a considerable challenge, especially with repayments. It's imperative to weigh the pros and cons and ask for guidance regarding saving plans to build up their equity.

References:
What is the new NSW land tax option for homebuyers?. https://mozo.com.au/home-loans/articles/what-is-the-new-nsw-land-tax-option-for-homebuyers