New law to allow First Home Buyers to purchase property using Superannuation

Parliament is set to debate whether First Home Buyers should be allowed to purchase property by having early access to their Superannuation. Proposed by Senator Nick Xenophon, this scheme will be similar to the one already in effect in Canada, where people can borrow as much as $25,000 from their Super and repay it in 15 years.

The proposed law has been met with mixed reactions; with others citing that this idea was taking government assistance too far, as this would create complications in cases of separation and if other circumstances take place. Others believe that the idea should be expanded to accommodate as much as $100,000 in borrowings to their Superannuation, as property values are expected to grow over time to cover this amount.

Will this new law serve as a solution to the Australian dream of owning a house, or will this pose a huge risk for one’s nest egg? The debate will be settled soon enough.

Read more about this on the Adviser website.

Growing optimism for first home buyers

First home buyer numbers rise for the second consecutive month to a seasonally adjusted 2.2%, according to the Australian Bureau of Statistics. Master Builders Chief Economist Peter Jones believes that this will provide inspiration to the growing confidence of first home buyers as they make their presence felt in the market again.

In the 2013 and 2014 fiscal year, new home loans have increased by 12%, attributing to low market rates and high construction activity, both conducive for first home buyers. New home loan building is also at a four – year high of 13.2%. Although this is still below the long term average of 20%, first home buyer data is in an upward trend. Economists are expecting this to continue, as first home buyers are trying to make their presence felt back into the market.

Read more about this on the Property Observer website.

First Home Buyers: The 5 facts

First Home Buyers are slowly losing hold of the property market as it posted a record low share of 11.8%, according to the Australian Bureau of Statistics.

Here are 5 facts about the current situation of First Home Buyers in the country:

  1. First Home Buyers financed loans have dropped by 10% in August at 6,055 compared to the previous month’6,718.
  2. First Home Buyer numbers have remained unchanged for the past decade, despite increases in Median Price and lesser concessions.
  3. First Home Buyers are having a hard time as the First Home Owners Grant has gone through several changes, the most important of which is adding a cap depending on the value of the property. In 2004, First Home Owners Grant was uncapped.
  4. If predictions are correct and the interest rates increase next year, repayment for a $300,000 home loan is expected to increase by $300 every month.
  5. Median house prices have ballooned by 72% over the past decade.

Read more about this on the Property Observer website.

First Home Buyer wages outpaced by house prices

BankWest recently revealed a study showing that despite a 2.6% pay increase in 2014, First Home Buyers are still faced with the difficulty of purchasing property, as median house prices have increased by 7.1%.

BankWest also pointed out that low interest rates are not helping, as savings accounts are offering small returns, making it more difficult for home buyers to save up for deposit. Median house prices in the country sit at $469,000 this year, up from the previous year’s $438,000. The report shows that it now takes an average of 4.1 years to save up for the standard 20% deposit, up from the previous average at 3.9 years.

Read more about this on the Broker News website.

Avoid These First Home Buyer Pitfalls

Purchasing your first home is an exciting and daunting experience – from house hunting, to financial arrangements. Each step when purchasing property should be carefully thought out, as many first time buyers fall into the same traps. Here are some of the pitfalls you can avoid as a first home buyer.

Do not go beyond your budget. Once you’ve come up with figures on how much you can afford, stick to it. Do not purchase with the idea that you will just figure out the excess afterwards. This will only give you financial stress.

Do not rush. Purchasing property takes time, and you might settle for properties with small problems. Beware of these decisions that you might regret later. Review the features that suit you, and do not settle for anything less.

Do not be too picky. On the other hand, you might want to make sacrifices for features that are not that important, for as long as these can be added later. Purchase property not only for its current value but also do your research and figure out its potential.

Inspection reports. This gives you a birds-eye view on the property and surrounding developments, giving you an idea as to how valuable your property will be in the future. Check for nearby infrastructure, road and land rezoning that is planned in the area.

Financial arrangements. So you have the perfect property, are you able to secure the appropriate financial arrangements to afford it? You might also want to factor in additional costs when purchasing property. Seek pre-approval so that you have an idea as to how much you can afford before you go ahead with house hunting.

Property Market to favour First Homebuyers: RBA

First Homebuyers patience has been wearing thin, as the Reserve Bank suggests them to remain patient with the current boom in the property market. A recent report from the Australian Bureau of Statistics show that First Homebuyers for March barely increased by just 0.1% at 12.6% from the previous month.

The RBA’s head of Financial Stability Dr Luci Ells believes that the chance of experiencing another property boom is very slim, citing home value increases over incomes. She is convinced that the property cycle will eventually create a situation favorable for First Homebuyers. For the 12 months leading to April, home values have increased by 11.5%.

Read more about this on the website.

First Homebuyers are back, but at a price

Data from the Australian Bureau of Statistics show a shocking rise in First Homebuyers for December of last year, despite increasing house prices. The number of First Homebuyers increased by 2.8%, the highest it has been over the year.

Home loan prices have ballooned to $344,000 from $322,000 in November, showing that First Homebuyers are slowly coming back to the market – but at a more expensive price. In Sydney, finding properties around $400,000 will be difficult, as the capital city has a median price of $763,169, increasing by 14.3% over 2013.

First Homebuyers have become cautious lenders despite the low interest rates, as fears of an interest rate hike in the year can negatively impact their purchases.

Read more about this on the Sydney Morning Herald website.

Lender offering 95% LVR loan for First Home Buyers

In an attempt to woo First Home Buyers, a leading lender is offering home loans at a 95% Loan to Value Ratio. Liberty is offering this loan without Lenders Mortgage Insurance.

Liberty’s national sales manager, John Mohnacheff believes that First Home Buyers are discouraged from purchasing property because of tight lending rules and regulations. He is confident that Liberty is setting a new standard in home lending with this initiative.

As of December last year, First Home Buyers comprise a measly 10.2% in home loans. Major real estate bodies have called on the Government to abolish stamp duty to make homes accessible to First Home Buyers.

As with all financial decisions, it is best to consult a financial planner if this option is for you. Liberty’s 95% LVR loans’ interest rates start at 5.79%.

Read more about this on the Adviser website.

Is this the end for First Homebuyers?

First homebuyers have been noticeably lagging behind despite high demand for property, wherein the current number of First homebuyers comprises just 12.5% of the property market. Housing affordability has been the factor in question, as property values have been increasing steadily. In Sydney alone, the median paid amount for auctions are at a staggering $900,000.

The First homebuyer dilemma is where to find an affordable property. This is a common misconception, as there are still states with enough First homebuyer activity. According to Australian Property Monitors (APM), Western Australia and South Australia have First homeowners comprising 20% and 15% of the property market respectively.

Professionals in the property market are calling on First homebuyers to take this piece of advice: consider pooling your finances to purchase property, or consult financial planners as they have first hand information when looking for property that matches your financial capacity.

Read more about this on the MyWealth News website.

First Home Owners Grant changes

Good news for first home buyers.

The First Home Owner Grant (FHOG) was changed last week to accommodate Western Australians who would like to purchase property. A $3,000 grant was made available for first home buyers upon contract signing.

This move will provide buyers with incentives and encourages building new dwellings instead of purchasing existing property. This is great news not only for first home buyers, as this will also address the existing issue of housing shortages and will be a huge boost for the construction sector.

Read more about this on the Adviser website.