2020 was shaping to be a bumper year for property buyers due to historically low interest rates, easier-to-access credit and more properties to become available in the market. However, with Covid-19 and isolation in full swing, we now notice fewer properties coming to the market.
During this Covid-19 period, first home buyers have found that most of their competition from investors and down-sizers have all but gone but so has the choice of property to buy. As a result, first home buyers are still experiencing challenges when having to compete for the property of their choice!
Finance can be the biggest challenge. While financing has been made easier for people with low credit risk, anyone with a slight tarnish on their credit history or with a unique way of earning money may experience difficulty in getting approved.
Banks are requiring less paperwork now, but open credit reporting has become available on the web, banks can access 24 months of a person’s history rather than the six months they did in the past.
This means people have to keep their credit history clean for two years and must save now if they want to purchase in the future.
It is important for first home buyers not to worry about missing out. Real estate should be regarded as a long-term investment. Rather than choosing to purchase in a location that is cool and possibly paying a higher price, buyers should look at areas where there is more supply. A little further away from the beach, bars and the city.
Suburbs like Kotara, Charlestown, Cardiff and Warrabrook. Homes near infrastructure, on a train line and shopping centres are good buys. Reasonably-priced small homes or townhouses like 3/8 Jill Parade Charlestown are good purchases.
For apartments, purchase in the inner west like this ‘off market’ home at 1003/11 Charles St Wickham and if on a tight budget choose something smaller or older.
First home buyers are also advised not to panic because more stocks are coming into the market, which will re-balance demand and supply. It means they could rent for another year until prices become affordable.
First home buyers should also consider “rentvesting” as a strategy. Rentvesting means investing in reasonably-priced markets and renting in a suburb they prefer.
The new First Home Loan Deposit Scheme, which lets buyers get a loan with a deposit of only 5%, can help buyers and invigorate the lower spectrum of the property market.
People should seriously address any difficulty they may have regarding raising finances. Banks are known to examine the personal spending much more closely thoroughly for first-time homebuyers.
Use Covid-19 to help get a loan approval by preparing food at home instead of getting take-in. Now that you’re not going out to coffee shops, cafe’s and bars, you won’t even need new clothing or shoes either. Banks would look at you more favourably if you are cutting back on your expenses.
Lastly, it is important for you to get pre-approval before you start inspecting new homes. You need this to be in a favourable position when competing for the home you really want and you need to be able to action your intention to buy.