“The real estate bubble hasn’t burst but first home buyers should know where to look and not over extend themselves on lending.”
As interest rates rise and housing affordability in Sydney reaches record highs, Luci Ellis, the head of the Reserve Bank’s Financial Stability Department has dismissed the notion of a housing bubble in Australia, but has warned potential first home buyers of the risks in overextending themselves in the housing market.
A recent report released by the Commonwealth Bank using information compiled by RP Data shows the opportunities for first home buyers are actually more wide spread than most would have thought – first home owners just need to know where to look and what to look for.
When it comes to first home buyer purchasing options, surprisingly, Sydney leads the way. Over the second half of last year there were 8,712 houses and units (4,118 house sales and 4,594 unit sales) sold across Sydney that were within 10 per cent of the average Sydney first time buyer price of $388,167.
For houses, only 33 of these sales occurred within suburbs less than 10 kilometres from the Sydney CBD. For units, 1,265 sales occurred at a distance of less than 10 kilometres from the Sydney CBD.
Of all the capital cities, properties detailed, only 6 per cent of transactions for houses have occurred within 10 kilometres of the city whilst 38 per cent of unit transactions have occurred within the 10 kilometre radius.
This was not all bad news for first home buyers with houses recording a lower level of value growth than units during 2009. This trend was duplicated across each capital city including Sydney with unit growth outpacing house value growth.
Despite the fact that property values rose strongly during 2009, these figures highlight that there are still many opportunities for first home buyers to purchase properties in locations at or around the average affordability range of a first time buyer but options may be limited if you want to live close to the city and buy a house.
This report also suggests this trend points to more first home buyers choosing units as opposed to houses due to the more affordable price points. This is due in part to changing demographics and increased demand for apartment living and is creating more demand within the unit sector than what has historically been the case.
Inner city apartments are not only more affordable but will result in generous capital gains if they are bought in good locations close to public transport, shopping centres, restaurants and cafes. However, if first home buyers are prepared to widen their search and live in the outer suburbs of Sydney, houses can be found within the average first time buyer price of $388,167.
Housing affordability for new houses and apartments will be further reduced by the changes to the First Home Owner’s Grant which comes into effect on 1 July 2010 where first home owners purchasing a new property will revert back to $7k as opposed to the current $10k on offer.
Moving forward, with population growth remaining strong and first home buyer numbers anticipated to soften with changes to the grant, we are likely to see upwards pressure on rental rates and as a result it is expected that weekly rents and investor yields will continue to improve through 2010.
Housing finance data from the Australian Bureau of Statistics (ABS) shows that buyers returned strongly during 2009. First home buyer demand is now softening and early signs suggest that investors are set to pick up some of the slack during 2010.
This has been evident in recent housing finance data which shows that the number of loans for owner occupiers is decreasing and investor finance is increasing.
Whether you’re a first home buyer or an investor, a buyer’s agent in Sydney like Amanda can advise first home buyers on what the best locations to buy in terms of capital growth, show homes and apartments not yet listed for market and can help with the negotiation process to secure the best possible price for the property within budget.
Contact us if you would like help buying real estate in Sydney or surrounding areas such as Sydney’s inner west, lower, mid and upper north shore and northern beaches regions.
Amanda On My Side offers exceptional buyers agent services throughout Sydney and across Australia. Engage a professional real estate buyers agent to help you find the best property at the right price. Buyers agents, also known as property finders or a buyers advocate, can help find, research and bid on your next home or investment property. Need a buyers Agent Sydney – then you need Amanda on your Side.
Tags: buyers agent, first home buyers
