54 Raleigh St, Westmeadows, has an affordable $599,000-$649,000 price guide for its August 21 auction.
Despite soaring housing prices and lockdown hurdles, a new report has boldly declared “now is the most affordable and advantageous time for first-home buyers”.
PRD Real Estate chief economist Diaswati Mardiasmo states in the Property Tests Positive report that government incentives, record-low interest rates and the fact local buyers are “sheltered from the usual international demand” has helped create a favourable environment for first timers.
But Dr Mardiasmo did concede this was a delicate balance, and government intervention may at some point be required to ensure Australians can continue to break into the market, and to mitigate future mortgage stress.
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The report found that despite having “some tumultuous rides” since the onset of Covid-19, metropolitan Melbourne’s median house price hit $912,100 in the first half of this year – a $52,800 increase on the same period in 2020.
But the proportion of family income required to meet home loan repayments had fallen 2.1 per cent annually by the opening quarter of 2021, “due to the low-interest rate landscape”.
Dr Mardiasmo noted her finding that now was the “most affordable and advantageous time” for first-home buyers may “seem to be a bit surprising, considering high real estate prices”.
But the fact the buyer group was “protected from international demand”, which they would normally have to compete against, by border closures fell firmly in their favour.
13 Fitzroy St, Laverton, is in first-home buyers’ budgets with a $575,000-$610,000 price guide.
“(And) we already know from a government policy and interest rate perspective, this is a very conducive environment,” she said.
“But if the combination of above changes in any way, there is a high chance it will lessen first-home buyers’ competitive advantage.
“Price growth is not showing any signs of a correction, therefore you can only assume home loan commitments will go higher.”
Should that be the case, to the point where homeowners were struggling to meet their repayments, government action that would “allow households to free up some of their budget to serve a higher monthly mortgage payment” may be required.
That could be in the form of changes to personal income tax, capital gains tax or in what can be claimed for investment purposes, higher family tax benefits or reductions on other taxable items.
“The goal is to add to household budget,” Dr Mardiasmo said.
Greenvale’s buying opportunities include 8 Verona St, for $870,000 $920,000.
The property researcher said affordable house markets north and west of the Melbourne CBD offered good buying opportunities, including Greenvale, Westmeadows and Laverton. Units were the best bet for those wanting to be closer to the city, with Footscray, Flemington and Carlton all achievable.
Buyer’s advocate Emily Wallace, of the My Millennial Property podcast, said as the saying went, “six months ago” was actually the best time for Victorians to break into the market.
But without the benefit of hindsight, and given the upward trajectory of the market, now was as good a time as any.
In first-home buyers’ corner was the lack of competition from overseas buyers, low interest rates, additional savings accrued during lockdowns by those who retained employment, and increasing acceptance of “parental help in the form of guarantor loans”.
An apartment at 107/64 Cross St, Footscray, is asking $295,000-$315,000.
But a major disadvantage was the low level of available housing stock intensifying demand and inflating prices.
“There is merit in acting quickly, particularly in the private sales setting,” Ms Wallace said.
“Don’t be afraid to ask agents about any off-market options they may be holding on to.
“Also don’t buy sight unseen, but having inspections scheduled for as soon as lockdown lifts is a great idea.”
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Achievable first-home buyer markets:
HOUSES
Bellfield: $885,000 median
Greenvale: $800,000
Westmeadows: $697,000
Deer Park: $624,000
Delahey: $620,000
Roxburgh Park: $605,000
Albanvale: $599,000
Kings Park: $580,000
Laverton: $575,000
Broadmeadows: $575,000
Meadow Heights: $545,000
Dallas: $490,000
UNITS
Lower Plenty: $542,000 median
Mill Park: $515,000
Footscray: $470,000
Flemington: $460,000
Carlton: $450,000
Epping: $449,000
Truganina: $441,000
Broadmeadows: $440,000
Sydenham: $440,000
Bundoora: $440,000
Notting Hill: $410,000
Travancore: $377,000
Source: PRD Real Estate
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First-timers trying to crack the market should take advantage of “affordable and advantageous” conditions, according to a new report. See the Melbourne suburbs it flags for houses and units.
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