The best time to purchase property in Perth could be now, particularly if you’re a first-time homebuyer.
It’s certainly a buyer’s market, interest rates are at record lows, there’s plenty of help available for first home buyers, and housing has never been more affordable.
It’s no secret that Perth is experiencing the longest property downturn we’ve seen in 30 years. Prices have fallen around 20% in the past five years, according to CoreLogic data, and home building has reduced significantly. The silver lining in these clouds, however, is that these conditions present the best opportunities buyers have seen in a long time, making it an ideal time to get your foot on the property ladder or upgrade your home.
Housing is affordable
With falls in house prices, many Perth suburbs are now more affordable, especially for first time home buyers. For example, median property prices in Ellenbrook over the last year have ranged from $340,000 for houses to $209,000 for units. If you are looking for an investment property, consider that houses in Ellenbrook rent out for $325 per week with an annual rental yield of 5.0%, while units rent for $270 per week with a rental yield of 6.7%. Right now, Ellenbrook presents a great opportunity to buy at a lower price and take advantage of any future capital gains when the market rebounds over time.
Interest rates are at record lows
With the Reserve Bank holding the cash rate at a record low 1.0 per cent and downgrading its economic growth and inflation forecasts, interest rates are at a historically all-time low. What’s more, many experts are predicting another cut before the end of 2019.
Financing conditions are easing
In the wake of the Royal Banking Commission, banks significantly tightened their lending conditions, which reduced buyer activity. However, the Australian Prudential Regulation Authority (APRA) has now asked banks to relax lending rules. APRA has flagged that it will lower its minimum serviceability buffer, making it easier, in theory, for buyers to borrow.
Help for first home buyers
In excellent news for first home buyers, the State Government announced it will temporarily increase Keystart income limits to help more people enter the housing market. The previous income limits of $90,000 for singles, $115,000 for couples and $135,000 for a family will be lifted by $15,000 for singles and couples and $20,000 for families between July 1 and December 31, 2019. This change followed the government’s $420 million extension of Keystart’s loan book in December last year, boosting its lending capacity to $4.8 billion. Keystart was established in 1989 to provide low-deposit loans to Western Australians unable to meet the deposit requirements of mainstream lenders.
What's my home worth?
Help is also available for first home buyers in the form of the State Government’s $10,000 First Home Owners’ Grant and discounted rates of stamp duty for eligible first home buyers.
The weak market conditions have seen many buyers and sellers shy away from the market. Those in a position to buy now have less competition to contend with and can take their time negotiating with vendors and making a well-considered purchase.
Current opportunities for buyers
The flip side of falling consumer confidence, and its impact on the property market, are the challenges that a strong market presents for buyers. When consumer confidence is low, confident buyers can take advantage of the opportunities afforded by weaker housing market conditions. First-time buyers will likely find they can finally get their foot on the property ladder and, with the gap between property price brackets smaller, and more time to make a decision, it’s a great time to upgrade.
Talk to our expert team today if you need help planning the next stage of your property journey.