Tips For First-Home Buyers As Housing Affordability Worsens

The latest ANZ/CoreLogic Housing Affordability Report paints a grim picture for aspiring homeowners. Housing affordability has continued its downward spiral. Here’s a snapshot of the unsettling statistics from March 2024:

• The portion of income required to service median new rents reached a new high of 32.2% nationally.

• The portion of median income required to service a new mortgage reached 48.9% nationally.

• The time it takes to save for a 20% deposit has increased to 10.3 years.

Expert Tips For First-Home Buyers

Given these challenges, we turned to our seasoned Home Loan Experts for their invaluable guidance. Let’s delve into their insights:

Mastering Negotiation Tactics

Home Loan Experts Senior Mortgage Broker Vivienne Than provides a few ways first-home buyers can come out on top in today’s competitive market.

• Be reasonable and realistic when making an offer on a house: In a very competitive market with low supply, don’t expect to get a bargain. Aim for a win-win situation.

• Understand the seller’s need for flexibility with the settlement date: Sellers often have specific needs related to the sale, particularly regarding the settlement date (closing date). A first-home buyer can craft a more attractive offer by considering the seller’s motivation.

  • For example, if an elderly couple is selling to move to assisted living, they might need extra time to find a new place. Offering a later settlement could be a big advantage for your offer.

  • Conversely, a younger couple selling to upgrade to a bigger house because they have a baby on the way might prefer a faster closing to move into a bigger place sooner.

  Flexibility with the settlement date can be a powerful tool for first-time buyers in a competitive market.

• Consider properties with leases: Many investors are quitting the market, as the cost of holding is very high. This means an increasing number of listings on the market come with a lease in place. And because many first-home buyers don’t understand the rules from lenders and state governments regarding buying with the lease in place, they tend to disregard such properties. But these can be real gems. Plus, you’ll have fewer competitors, as not many first-home buyers want to face not being able to move into their homes straight away. As your broker, we will guide you through the finance process and how to set the settlement date to benefit you.

Have Few Or No Liabilities

Mortgage Broker Siddhartha Bajracharya emphasises that as a first-home buyer, keeping your credit history clean and having few or no liabilities is important. “This opens doors to qualifying with more lenders and getting room to negotiate rates.”

He further explains how first-home buyers can get three benefits: stamp-duty waivers, government schemes from Housing Australia, and a First Home Owner Grant. “All three benefits have their own set of eligibility [requirements], so it’s best to speak with brokers to understand how they can use them to their advantage,” Siddhartha says.

Buy What You Can Afford

Senior Mortgage Broker Romy Dhungana says, “The right time to buy is usually now. You can always upgrade to a bigger or better place later.”

Don’t time the market, it’s the time in the market that makes a difference.

Get Pre-Approved

Siddhartha and Romy both emphasise how important it was to get pre-approved before buying your first home.

Siddhartha explains, “Avoid rushing in to buy. Get pre-approved for a loan first, so you know how much you can borrow and reduce stress during the buying process.”

Romy explains, ”Knowing your financial standing before house hunting gives you the upper hand, allowing you to act swiftly when you find the right home.

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Get More Help From The Experts

Looking for more good guidance to help you find your home? At Home Loan Experts, we’ve helped thousands of first-time buyers get approved. We are passionate and care about increasing your chances of mortgage approval. Call us on 1300 889 743 or complete our free online assessment form today.