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Still Room For First Time Buyers

With fewer first buyers taking out home loans than a decade ago, one might have concerns for the future of the Great Australian Dream. While affordability is squeezing high-demand capitals, such as Sydney and Melbourne, interest rates remain at record lows, continuing to give astute first-time buyers opportunities to purchase their piece of the property pie. Just because you can't afford what or where you want to buy first up, doesn't mean you should forego property altogether. The longer you leave getting into the market, the harder it may become. Property prices may increase beyond your reach or the cost of living in general may climb, making it harder to save for a deposit. While you may not be able to afford your dream home now, you can still take steps to help you afford it in the future.

Be prepared to compromise

While location remains the main mantra when it comes to property, many buyers may have to compromise on where they stake their first claim.

Rather than honing in on houses, consider an apartment, or even older units, which often have bigger floorplans and greater scope for renovating and redecorating.

If scoping inner-city or even middle-ring suburbs, set your sights on outer suburbs with greater affordability. You may have to commute further if you work in a CBD, and it may take longer to get to the beach on a hot summer's day, but living on the urban edge can have lifestyle advantages.

• You can escape quicker for a tree change, with many outer suburbs bordering bushland or national parks.

• Amenities and infrastructure, such as shopping centres and hospitals, are often newer on the city fringe.

• Your area is likely to be full of other first-home buyers, which often include young couples and young families, bringing energy and a greater sense of community to a neighbourhood.

Buying in newer, outer suburbs also means newer houses or apartments, which usually means fewer maintenance and repair costs, and more contemporary building materials, décor and landscaping. You may find that once you are in the market and have paid down some of your first mortgage, you are in a stronger financial position to revisit your original desired location.

Make a move

It's a bold idea – and certainly not for everyone – but is the quest for your first property an opportunity to live in a totally new city or region?

Apparently around one in three of us was prepared to pack up and move interstate to improve our financial lot in 2012, if the ING DIRECT Financial Wellbeing Index of that year was anything to go by.

The reality is around 300,000 to 350,000 Australians move interstate each year, according to the latest available data from the Australian Bureau of Statistics. While many may move for family or work reasons, first home buyers looking for more affordable digs could also be part of this migration.

Before you call the removalists consider:

Financial security – can you secure employment before you make the move?

Lifestyle – what local hobbies, amenities and attractions will help you have a fulfilling personal life?

Family – if you have a partner and/or kids, will they be happy in the new location?

On the flipside, relocating to a new state, city or town is a potentially exciting opportunity to experience new people and places, and pocket some savings along the way.

Become a rent-investor

There's no rule that says you have to live in your first property. Many first home buyers are challenging convention by rent-investing – renting where they want to live and buying an investment property in a more affordable location.

The objective for these renters is to buy where they can afford to get a foothold on the property ladder. That could be another suburb in the same city or a town in an entirely different state.

As with any investment, the key is to choose a property on financial merit, not emotion. Are you looking for capital gain over time or high rental yields right away?

The investment property can be positively geared, where the rent exceeds the cost of the mortgage and upkeep to give you a profit, or negatively geared, where the rental income is less than the cost of owning and managing the property, creating a tax deduction.

Seek legal and financial advice so you are well informed about how renting and taking on an investment property impacts your finances and tax obligations.

Maximise incentives

Various grants and stamp duty concessions are offered in each state and territory to give first home buyers a leg up. As at February 2017, here's a snapshot of what's available and where, do bear in mind that things could change, so double check before you commit. For more information, visit New South Wales First Home Owner Grant (new homes) • Amount: $10,000. • Eligibility: New homes valued at $750,000 or less.

Stamp duty help for first home buyers • No duty on new homes valued up to $550,000 and vacant land valued up to $350,000. • A duty concession on new homes valued between $550,000 and $650,000, and vacant land valued between $350,000 and $450,000. Australian Capital Territory First Home Owner Grant • Amount: $7,000. • Eligibility: New or substantially renovated properties valued at $750,000 or less.

Stamp duty help for first home buyers • Just $20 in stamp duty is payable on new or substantially renovated homes up to $468,000, with a sliding scale to $590,000. • Gross income thresholds apply and increase according to how many children you have.

Queensland First Home Owners' Grant • Amount: $20,000 until June 30. • Eligibility: New homes valued at $750,000 or less.

Stamp duty help for first home buyers • The First Home Concession offers significant stamp duty discounts for first homes valued up to $550,000. • First home buyers purchasing a home valued at more than $550,000 can apply for a stamp duty concession through a second scheme called the Home Concession scheme. Western Australia First Home Owner Grant • Amount: $15,000 until December 31. • Eligibility: New homes valued up to $750,000 if south of the 26th parallel (metropolitan Perth and south) or up to $1 million if north of the 26th parallel.

Stamp duty help for first home buyers • First home buyers are exempt from paying duty on homes worth $430,000 or less. A sliding scale for concessions applies to homes valued $431,000 to $530,000. Victoria First Home Owner Grant • Amount: $10,000. • Eligibility: New homes valued at $750,000 or less (total land and home).

Stamp duty help for first home buyers • A 50 per cent reduction on duty for new or established property in Victoria valued from $130,000 to $600,000. • Further duty discounts may apply if first home buyers are buying off the plan. South Australia First Home Owner Grant • Amount: $15,000. • Eligibility: New homes valued at $575,000 or less.

Stamp duty help for first home buyers • Concessions of up to $21,330 apply to new or substantially refurbished apartments purchased before June 30. Tasmania First Home Owner Grant • Amount: $20,000 until June 30 and $10,000 from July 1. • Eligibility: New homes – no threshold. • No stamp duty help for first home buyers.

Northern Territory First Home Owner Grant

• Amount: $26,000.

• Eligibility: New homes – no threshold.

Stamp duty help for first home buyers

• Up to $23,928.60 in stamp duty relief is available for first home buyers purchasing an established home valued up to $650,000.

• First Home Owner Grant recipients can also apply for the Household Goods Grant Scheme worth $2,000.


This information is current as at 22/05/17.

This article has been prepared by Heart1Stop, a social media brand owned by Heart Mortgage Services and Heart Financial Advisers. The information contained in this article is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The views expressed here are not those of Heart1stop, Heart Mortgage Services, Heart Financial Advisers, shareholders, directors or staff and associated contractors and business associates. This article has been prepared without taking into account any person’s objectives, financial situation or needs. Because of this, you should, before acting on any information contained in this article, consider its appropriateness, having regard to your objectives, financial situation or needs. Any taxation information contained in this article is a general statement and should only be used as a guide. It does not constitute taxation advice and is based on current laws and their interpretation. Each individual’s situation may differ, and you should seek independent professional taxation advice on any taxation matters. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. It is not the intention of Heart1Stop or Heart Mortgage Services and Heart Financial Advisers that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party of Heart1Stop or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties ("Third Parties") who are not related to Heart1Stop. These links are provided for convenience only and do not represent any endorsement or approval by us.

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