First Home Buyers Back in the Market

[BayView]

The financial consequences of that happening are far smaller than if you purchase a property under the same circumstances. There seems to be an assumption that if you run into trouble in owning property you can always clear your debt with the sale. Maybe in a booming market. Not this one.

It is important to point out, that as a risk management strategy to insure against losing your job, purchasing an expensive asset is probably not a safe, prudent idea for the FHB. In fact it is probably the worst idea you could come up with.

Yes, if you're an experienced investor it might be a good strategy. But not for the first home buyer.

Anyone can lose their job at any time for a variety of reasons.

But, if everyone lived their life with this though in the forefront of their mind they would never buy anything, go anywhere, and certainly not buy a house.

A world full of D&G'ers who do nothing but sit around waiting for the world to end.

Thankfully, the human spirit is much more resilient than this.

Hopefully, most sensible adults looking to buy a house will do so factoring in a margin for "life" to occur.

Unfortunately, as has been shown throughout history, a percentage of them don't, and pay the consequences when things turn south.

So, go out and buy that house, but be careful.

 

[warmed_cockles]

Anyone can lose their job at any time for a variety of reasons.

But, if everyone lived their life with this though in the forefront of their mind they would never buy anything, go anywhere, and certainly not buy a house.

I don't disagree with that statement at all. But what you've just said sounds nothing like this:

I have also mentioned before that if people are worried about [losing] their jobs then they definetly need to get on the property ladder now before they do

 

[sparky23]

Yes it may have been worded a little clumsily but the sentiment is as expressed by bayview.

 

[josko]

You don't think sparky's urgings for people to get into property ASAP despite possibly fearing for their job have an ulterior motive?

Sparky

Can I just say that I wasn't trying to say that people can rush out and buy luxury penthouse apartments and be able to afford them with no job!

No, I don't.

Regards Jo

 

[sparky23]

By the way all you mcp chappies from the dark side, did you want to pop back and let the rest of them know they need to do their research a little better if they think Shellharbour City is some kind of a backwater in the sticks, try looking up Shell Cove and Flinders and they might do a little better!

 

[ffc1883_1996]

All the grant does is pull demand forward.

I think you’re right about this. But perhaps it also pulls supply forward.

Shortly the new grants were announced, a huge number of new off-the-plan townhouse advertisements showed up on realestate.com.au. Many of these are developments that I suspect were on the ‘back burner’ pending more favourable conditions.

I suppose that this is whole point of the grant. By brining these projects to life, the construction industry keeps working.

Anyway, what happens after the glut of FHBs and projects has passed through? Do more fundamental market conditions apply?

 

[warmed_cockles]

I think you’re right about this. But perhaps it also pulls supply forward.

Shortly the new grants were announced, a huge number of new off-the-plan townhouse advertisements showed up on realestate.com.au. Many of these are developments that I suspect were on the ‘back burner’ pending more favourable conditions.

I suppose that this is whole point of the grant. By brining these projects to life, the construction industry keeps working.

Anyway, what happens after the glut of FHBs and projects has passed through? Do more fundamental market conditions apply?

I certainly saw a rush of properties appear online when the grant was announced. It is probably achieving a kind of equilibrium - allowing the developers and overleveraged property owners to get out in an orderly fashion, rather than panic stations.

 

[goodmorningaus]

i apologise if this is something of a non-sequitir but the new year has seen an explosion of FHBs in the ACT at least. This is purely anecdotal evidence but I have been to several low-end exhibitions in the past three weeks, the latest being today and forget it. Investors have no chance with so many FHBs throwing money around. Last weekend I went to one and during the 10 minutes I was walking around the house I heard two offers thrown at the REA, both dismissed because higher offers had already been made! Today (a Tuesday no less!!!) I went to an exhibition but didn't even bother stopping because the street was so choked with cars. I am serious, its as if they were holding a school fete or something. There must have been 20 cars for the open house. Granted I am going only to the really cheap places, but a lot of others are too.

I think that all the talk of doom & gloom might have an interesting side-effect. People hear that prices are crashing and they believe it. Even when they aren't! So the smart real estate agent will list a property for 10-15% less than the typical market rate, attract enormous interest, and get a horde of FHBs bidding against one another. Its insane.

The mid and high end markets in the ACT are not doing well (irrelevant to me as I am not looking to invest in that area), but unfortunately for me, the lower ends are doing all too well. I am looking for bargains but cashed up FHBs keep stealing them away from me!

Anyway, that's my rant on my tiny little corner of the world. Everything is relative.

 

[Witzl]

goodmorningaus,

im finding the same in the cheap areas of Sydney. What i bought in Nov 2008 now costs $30k more, purely thanks to FHBs buying up all the good deals and throwing money around willy nilly.

Its going to be really hard to get a good deal on the next property for me.

 

[sash]

goodmorningaus, witzl

Could not agree more....a friend and I have noticed the good value stuff is walking out the door. In most instances...by the time we call the property is under contract. The agents are getting cocky again with all the interest!

In some instances a bidding war has erupted between emotional FHBs and the property which sat for months went higher than the advertised price!

Whilst this is painful....there is a silver lining for me as all my properties are in the low end. I expect that these will go up about 10% this year...woo hooo!!!

im finding the same in the cheap areas of Sydney. What i bought in Nov 2008 now costs $30k more, purely thanks to FHBs buying up all the good deals and throwing money around willy nilly.

Its going to be really hard to get a good deal on the next property for me.

 

[Witzl]

Whilst this is painful....there is a silver lining for me as all my properties are in the low end. I expect that these will go up about 10% this year...woo hooo!!!

Well it works both for and against for me as well.

FOR: I will be able to refinance my $226K purchase for easily over $270K in just a few months.

AGAINST: Most of that refinance i pull out of the house will have to go towards paying more on the price of the next property.


dammit i was hoping for at least one more bargain before this happened.

 

[BayView]

Well it works both for and against for me as well.

FOR: I will be able to refinance my $226K purchase for easily over $270K in just a few months.

AGAINST: Most of that refinance i pull out of the house will have to go towards paying more on the price of the next property.


dammit i was hoping for at least one more bargain before this happened.

On the flipside; you went out and bought the property, and made the $44k cap gain in only a few months. Excellently done.

The majority of penguins did nothing, and will not be able to even think about buying the next IP which you now contemplate.

Keep looking at the half-full glass.

 

[Witzl]

Oh yeah - im looking at the glass half full! We've got some good gains which i will be able to easily pull out with a refinance soon.

it just means i have to look harder now to find a good deal on the next purchase.

 

[csc]

Has there been any figures released on the number and value of the new home grants as yet or is it still a bit early?

Love to compare the pre and after results.

There are still many new home punters sitting on the sidelines i think currently waiting for better deals to pop up in my city..

I just sold a cheap property @ $300k....had two open houses, had 50 plus through in total but only two offers, one which I signed this week.

expectations of new home buyers in my area are high..many were looking in the $200K bracket but absolutely nothing worth considering in that price range fit for habitation.

Anyway any feedback on the figures for the new home buyer scheme most welcome if available....thanks!

 

[Propertunity]

Has there been any figures released on the number and value of the new home grants as yet or is it still a bit early?

Figures for November 2008 show that 5,385 first home buyers entered the property market using the First Home Owners Boost, announced on October 14 last year.

The states with the highest number of applicants taking up the Boost were NSW (2076) and Queensland (1428), followed by Victoria (814).

Western Australia recorded 297 applicants, South Australia 481, Tasmania 115, ACT 102 and the Northern Territory 72.

Cheers,

 

[csc]

excellent thanks for that but do you know how this compares to say mid 2007 before the new offers came out?

i feel this scheme is just propping up the market bottom end..as soon as it finishes the bum will surely fall out of house sales overall...

i know agents are spruking best they can with saying business is still going well but i doubt they can say that for mid/high priced properties..

the bottom end is keeping their cash flow happening...

id say if an agent doesnt have a solid rent roll then they will surely struggle over the next few years if not close their doors...

and theres plenty of agents that dont have a good rent roll around, especially the boutique agents...

good luck.

 

[Propertunity]

i feel this scheme is just propping up the market bottom end..as soon as it finishes the bum will surely fall out of house sales overall...

This scheme may well be propping up the bottom end of the market....but remember that as the FHO move in, in turn their sellers then move out - to their 2nd or 3rd home, and as as they move in etc and it all flows through the whole market. Stats won't show that yet becuase it all takes time to wash thru the system.

the bottom end is keeping their cash flow happening...

I'm guessing that is what our fearless leaders had in mind. And the FHO go out to Harvey Norman and buy some white goods for the new place and so on.

id say if an agent doesnt have a solid rent roll then they will surely struggle over the next few years if not close their doors...

I'd say a lot that were going to close have already done so. There is no doubt that a good rent roll means a REA can survive with little or no sales. Bear in mind that if everything really gets bad - people will still need to sell - at any cost sometimes and when they sell the REA still makes his commish.