RBA’s decision to cut interest rates to a historic low , in addition to the government’s proposal to guarantee first-home buyer loans with deposits as little as 5 per cent, has made housing affordability skyrocket.

The two decisions are part of a larger economic initiative to help boost the sluggish property market which began its decline in 2018 and have resulted in signs of stimulated activity with data from Domain showing increased attendance at appraisals and home inspections.

However, the increased ability to afford houses has also resulted in a sense of urgency.

A rise in competition

Home buyers who have entered the property market have said that they have witnessed a rise in competition following the federal election.

Alexandra Reid, who has been on the hunt for her new home for over nine months, said that “I feel like there is a sense of urgency … I’ve noticed even in the past two weeks that properties are going quicker … ones that have been on the market for a while have gone in the past two weeks.”

Furthermore, according to Eliza Owen, a research analyst at Domain, declining prices were the single biggest factor that helped first-home buyers enter the market.

“What the first-home buyer data tells us is when prices go down, first-home buyer activity goes up,” Ms. Owen said.

“When the market is coming down, investors lose interest, downsizers don’t want to sell and therefore won’t go to buy a new property … so a downswing is the perfect time for a first-home buyer to be more successful.”

Over in Pyrmont, IT worker Ian Pereira said the unexpected result of the federal election prompted him and his wife to purchase their first property sooner than planned.

Mr. Pereira said that his observation of increased buyers entering the market fear of missing out drove him to offer the asking price to the vendor.

Should first home buyers enter the market?

Yes. Mortgage Choice chief executive Susan Mitchell said the combination of factors made it a good time for first-home buyers to enter the market.

“Prices are lower than they’ve been, the interest rate is going to make it less expensive, the [APRA’s proposed looser lending condition] buffer will make it easier to get how much you want … it’s the best it’s been for a long time for first-home owners to get into the market.”

But Ms Owen offered a correction and stated that these conditions are not specifically targeting first home buyers but rather will benefit all home buyers.

Source: Domain