It wasn’t until Sydney was in the depths of its property price downturn that Sasha Hartley really committed to buying.
The 26-year-old marketing executive secured financial support from her parents in the form of a guarantor loan in order to secure her mortgage.
“I applied for pre-approval the day after the [banking] royal commission [report] was handed down,” she said. “All these restrictions came into place and we had to jump through a lot more hoops.”
She faced a lot more scrutiny into her spending patterns, which included her Netflix and Spotify subscriptions.
It took her three months before she found a property, by which time her pre-approval had expired and she had to go through the entire process again. She was eventually bought an apartment in Alexandria.
Since she bought, two interest rate cuts, the election result and changes to lending rules have added to more positive property sentiment, which has caused the downturn to inch closer to its end sooner than expected.
Domain’s June House Price Report, released on Thursday, showed price declines had slowed for the first time since the downturn began in December 2017.
“I think first-home buyers would like to see prices fall further, but that doesn’t look like it’s happening,” said Trent Wiltshire, Domain economist.
He said if the market was near the bottom as forecast, it would be a good time for first-home buyers to purchase property.
“This correction has helped with affordability but it still remains a big problem with Sydney being the most expensive city to buy in Australia,” Mr Wiltshire said.
While prices have returned to 2015 to 2016 levels, Mr Wiltshire said wages had grown slowly since that same time.
He also acknowledged interest rate reductions as a big factor of improved affordability.
“Paying off a mortgage has become easier. The big challenge, of course, is saving for that deposit for first-home buyers, and with prices rising that’s more challenging,” he said.
Industry experts said that as a rule of thumb, owner-occupiers would usually be granted a loan not more than five to six times their annual household income. To get a loan of six times their income, which is considered high, borrowers would often need to show they have no dependents, no other debt and reasonable living expenses.
The actual loan size granted may often be smaller, as borrowers also have to prove they can keep up with the repayments.
The average 21 to 34-year-old earns $58,635.20 a year, ABS figures show.
An average dual-income couple in this age bracket who managed to borrow five times their household income and accumulated a 20 per cent deposit would be looking at properties worth $732,940.
An average single person in the same situation would be looking at properties worth just $366,470.
Buyers’ agents recommend first-home buyers have their finance approved and use a mortgage broker because they can negotiate better deals and, potentially, larger borrowing capacity.
Oasis Skeen buyers’ agent Paul Wilcox said buyers needed to think like an investor, taking the emotion out of the process and sticking to their walk-away price.
“Be confident when talking to agents, know the area you are looking to buy in – follow sales and listings so you can be as knowledgeable as the agent,” Mr Wilcox said.
“Try to buy before – if not move on – and don’t get emotionally invested. Move quickly when offering as speed wins, and get to know key agents in the areas – call them regularly as a good way to get information.”
He said first-home buyers should remember it was a first property purchase and not a forever home.
Mr Wilcox suggested Randwick, Crows Nest, Drummoyne and Earlwood were good value suburbs for first-home buyers for their proximity to transport and the CBD.
First Home Buyers Association director Taj Singh warned first-home buyers from panic buying.
“There will be plenty of opportunities, especially as the number of properties on the market picks up over spring,” he said.
If a property has been on the market for more than 50 to 60 days, buyers were more likely to get a bargain after negotiation with an agent, Mr Singh said.
He said good value suburbs for first-home buyers included Hornsby, Blacktown, Marrickville and Leppington – all areas that have properties under the various government exemption thresholds.
LJ Hooker Newtown director Nick Moraitis reported an influx of buyers and more confidence at auctions since the election.
He said low stock levels were not helping buyers, and advised first-home buyers at auctions to be aggressive.
“I’m [also] seeing a lot more parent involvement than ever before, they’re drawing the cheques,” he said.
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