If anyone in the market place believes that First Home Owners will again be a market force because of stamp duty savings the Victorian State Government is offering, they are seriously deluding themselves.
Firstly, the stamp duty savings will count for anyone that has already purchased and settles after 1st July this year. Therefore there would have been a rush now! Average settlement is 60 days putting us past 1st July.
Secondly, the savings on a $565k (median house price in Melbourne) home will be just over $5700. As this is a reduction in Stamp Duty and not money that would be seen as a deposit, the banks will most likely not leverage this money which they did with the First Home Owners Grants. When $30,000 was being given to First Home Buyers, the banks looked at this as the equivalent of a deposit and lent accordingly. If you were borrowing 90% loan to value ratio, then with an extra $30k, if you could afford the repayments, the bank would lend you up to an extra $300k. This would not be the same with a reduction to a fee.
As far as waiting for further cuts through for the next 3 years in order to reach the full savings of nearly $14,500, the market will have most likely moved further than this. The best time for first home buyers, or anyone else for that matter, is as soon as they can reasonably afford to. Buying property is long term: 5 – 10 years.
As a first home buyer, if you cannot afford to purchase where you want to live, consider renting where you want to live and buy an investment property where the tenant will assist you to pay off the mortgage. Or, and this is the scary line for all you mums and dads, stay at home longer, and buy an investment property. Why don’t you join forces with your parents and buy a property together.
The sooner you get into the property market and the longer you are in the property market, the more money you will make.
If you are considering a purchase why don’t you drop in for a no obligation chat.