According to the latest data from the Australian Bureau of Statistics, first home buyers (FHBs) are making a significant impact in the Australian property market.
Lending indicators data released in September 2024 reveals that more than one in three loans – 35.4 per cent were issued to FHBs in the three months leading up to July 2024.
As the spring selling season nears completion, Melbourne has witnessed a 7.9 per cent surge in listings according to ActivePipe (September 2024 Residential Newsletter), giving new buyers even more options to enter the market.
David McKenzie, Lending Specialist at Southside Home Loans, believes now represents a great opportunity for those looking to purchase their first home.
“First home buyers that are successfully securing a dream home are those that already have a solid savings plan in place and have stuck to it. Having the funds available for a deposit on both land and a house is essential to settling the deal. Planning your savings carefully will put you in a strong position to secure your first home.”
A minimum 5 per cent deposit for total cost of land and a house is required for most purchases in masterplanned communities like Windermere in Mambourin.
He added, “Purchasers can pay the initial land deposit and then focus on saving for the house cost. It is a structured way to stay on track. A crucial aspect of this process is understanding and managing a budget. FHBs need to review their spending habits, cut back on unnecessary expenses and focus on maximising savings.
“Also familiarise yourself with the Household Expense Measure (HEM), which calculates typical living expenses based on household size. Understanding where expenses fall within this measure helps buyers assess financial readiness for a home loan.”
A significant number of FHBs benefit from the federal government’s Home Guarantee Scheme (HGS), which allows buyers to avoid paying Lender’s Mortgage Insurance (LMI) despite having a deposit of less than 20 per cent.
In the 2023-24 financial year, the HGS helped over 43,800 buyers secure a home. The scheme includes the First Home Guarantee for FHBs, the Regional First Home Buyer Guarantee for regional buyers, and the Family Home Guarantee for single parents and legal guardians.
With 50,000 spots allocated for 2024-25, these programs provide excellent opportunities for FHBs to enter the market with lower upfront costs.
David added, “If you qualify for the scheme, you only need a 5 per cent deposit without paying LMI. In some cases, like the Family Home Guarantee, eligible single parents can purchase with a 2 per cent deposit, which is a big help.”
Five Tips for First Home Buyers:
- Know your spending budget and ceiling: It’s vital to understand what you can afford before entering the market.
- Save at least 5 per cent of the total land and house cost: Aim to save more if possible, reducing the overall loan amount and validating your purchasing power.
- Confirm loan servicing ability with a mortgage broker: Regularly check borrowing capacity to ensure it aligns with your goals.
- Manage household expenses: Make sure spending falls within the HEM appropriate for your situation, whether you’re single or part of a couple.
- Consider your HECS debt: If you have an outstanding HECS loan, understand how it impacts borrowing power and budget.
By following these steps and working with an experienced broker such as Southside Home Loans, FHBs can make informed decisions and take advantage of the prospects available in today’s property market.
David concluded, “Achieving the dream of owning your own home and moving out of the rental cycle is possible. With the right approach and financial plan, you can secure a place to call ‘my home’.”
Book a free appointment today with the lending specialists at www.southsidehomeloans.com.au
To find an affordable land lot visit the Windermere Sales Gallery at 275 Greens Road, Mambourin to discuss land and home and land package opportunities. Open Saturday – Wednesday from 11am- 5pm.
