Are You a First Home Buyer? The Tide is Turning

Have you been attempting to purchase your first home, but found yourself constantly pipped at the post by investors with deeper pockets? But never fear, as along with the more favorable temperatures, birds, bees and flowers, spring has brought a shift to the market.

The real estate landscape is changing

Spring has Brought a Change

Have you been attempting to purchase your first home, but found yourself constantly pipped at the post by investors with deeper pockets?

You’re not alone, as according to the Australian Bureau of Statistics (ABS), the monthly value of housing financial commitments from investors has risen from around $6 billion in July 2011 to well over $13.5 billion just four years later.

Meanwhile, first home buyers make up for about 15.4 per cent of total owner-occupied spending (roughly $19 billion), which amounts to around $2.9 billion.

In these kinds of conditions, it can be easy to become disheartened. But never fear, as along with the more favourable temperatures, birds, bees and flowers, spring has brought a shift to the market.

Change is in the Air

Of late, the property market across many parts of Australia has been nigh untouchable for first home buyers, with figures from the ABS revealing that real estate prices in Sydney skyrocketed 18.9 per cent in just the 12 months to June 2015. Melbourne and Brisbane posted 7.8 per cent and 2.9 per cent respectively, which pale in comparison but are still substantial increases on their own.

However, September 1 saw the beginning of spring, what is often considered the ‘selling season’. True to form, figures from CoreLogic RP Data show that September saw the largest number of new listings across Australia since March 2015. The increased supply has had a significant effect on the market – for instance, values grew just 0.1 per cent in Sydney for the month.

CoreLogic RP Data’s Head of Research, Tim Lawless, noted in a press release that while vendors are still benefiting from favourable conditions with demand exceeding supply, the tide is indeed beginning to turn.

“The slower month-on-month reading across the Sydney market comes at a time when auction clearance rates have slipped to the low 70 per cent range from week-to-week and the number of advertised properties has risen,” he said.

Mr Lawless stated that around Australia, the costs of property are becoming more favourable for first home buyers.

“Weakening labour markets, slower population growth and less demand for housing is placing downwards pressure on prices to differing degrees across these markets,” Mr Lawless said.

In light of this, what is making the market more accessible to first home buyers?

Increased Supply

According to CoreLogic RP Data, the auction clearance rate for the week ending September 17 2015 was the lowest since February. Essentially, this means there are fewer homes meeting their reserve price, indicating less demand and competition, which allows buyers more leverage.

Mr Lawless asserts the increased number of homes on the market are helping.

“The number of auctions held over the month of September was 31 per cent higher compared with September 2014 and new listing numbers are ramping up at a faster rate than last year as well,” he said.

Bank Lending Restrictions Taking Hold

The Australian Prudential Regulations Authority recently announced an increase in the amount of capital required to take out a mortgage from the major banks. In a September 26 article from Domain, Clare Rutledge, head of Urban Living by LJ Hooker, affirmed that the restrictions are beginning to make an impact, with first home buyers showing more confidence.

“The effect of the new bank lending rules is starting to trickle down and investors aren’t so heavy on the ground now,” she said.

Record Low Interest Rates Remain

At its most recent meeting, the Reserve Bank of Australia declared the official cash rate would stay at the historically low level of 2 per cent, where it has been since May.

“Low interest rates are acting to support borrowing and spending,” said RBA Governor Glenn Stevens.

This essentially means home loan repayments are easier to manage for first time buyers, particularly when first home owner grants (these vary state from state) and the aforementioned factors like increased affordability are added to the mix.

So, if you have been searching for your first home for a while, make sure your finances are in order as now could be your time.

We buy houses in Chandler, if you need to sell a house in AZ.

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Best Value Add Renovations

Adding Value One Room at a Time

We’ve had a look at some very specific renovations that can add value to your property when the time comes to sell, which can cut down on energy bills and improve the practicality of a home. But what about doing over an entire room? Obviously fixing up a kitchen is a completely different beast from making over the master bedroom, with different costs involved and different amounts added to your bottom line.

So without further delay, let’s see what you should do to some of the key rooms in the home – and if it will put many extra zeroes on your sale price.

Keeping it in the Kitchen

Historically, a kitchen renovation is the go-to task to add value to your home. However, it’s also one of the most expensive undertakings. According to 2015 Improvenet research, the average cost of a kitchen remodel is a little over $22,000 in Australian dollars. Given that the rule of thumb is you shouldn’t spend more than 5 per cent of the value of your home on renovations, this should be within reach of many home owners.

Bulking up the Bathroom

The same principles as the kitchen apply here – it can be done cheaply, but it depends on how much luxury you want to add. According to HGTV, it’s possible to renovate a bathroom for $100 per square metre. For small areas that can mean less than $5,000 without heavy customisation.

Adding a New Bedroom

Found yourself in the enviable position of having two lounges, or perhaps a basement or attic that could be converted into a new bedroom? You might just have hit a goldmine. Mr Caulfield also told Westpac that you can double your return when you turn a three bedroom home into a four bedroom one.

Don’t Go Overboard

Crucially though, you have to keep a cool head. Engage professionals for quotes, and get a set budget from several different firms – if they vary wildly, you need to be careful you’re not getting ripped off. On top of this, make it comfortable! If you don’t enjoy using these rooms while you live there, how can you be sure potential buyers will?

So no garish colors or experimental designs – keep it beautiful and functional for solid value-adding.

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