An increase in housing supply could lead to a more accessible market for first time homebuyers, according to a recent report from Finder. Researchers surveyed 34 real estate experts and economists regarding RBA’s potential changes to the cash rate and housing affordability.
78 per cent of those surveyed said that a cash rate increase was unlikely to happen until 2018 (it has held at 1.5 per cent through May and June). At 97 per cent, almost all of the respondents agreed that an increase in housing supply would make more room for first time homebuyers .
Graham Cooke, Finder’s Insights Manager, stated that an increase in housing supply could allow the property market to become more accessible as dwelling values decrease. With lower house prices first time homebuyers may be able to gather their deposit and manage repayments with greater ease. It is important for affordability that house prices slow to below wage growth to ensure that home ownership does not fall further out of reach.
It’s no secret that many looking to take their first step onto the property ladder feel as though property values are out of reach. With 97 per cent of the respondents calling for a greater supply of real estate, it’s clear that this could have positive repercussions on first time homebuyers.
A recent report from CoreLogic has revealed a small increase in the number of homes on the market, from just below four to just over four months’ worth of supply. CoreLogic’s report measures the volume of supply by the expected time it would take to sell all these properties. While the leap in April and May was only small, it still represents the greatest number of houses on the market in this period for the last five years.
What other insights into first homebuying were uncovered?
Other suggestions for increasing housing affordability split the panel, but suggestions were as follows:
- 37 per cent of respondents were for the reduction or elimination of negative gearing.
- 27 per cent thought the government should curtail or eradicate stamp duty.
- 17 per cent advocated an increase in the government’s first home owners grant.
What does this mean for your home loan?
While rates are expected to rise during 2018, an increase in housing supply might create downward pressure on prices. The RBA may be forced to keep rates stagnant for longer to avoid having rate increases put more downward pressure on house prices. If rates remain stagnant for the next couple of years, the benefit of fixed rate loans may not turn out to be as significant as expected. Fixed rate loans do still offer peace of mind through consistent repayments over the fixed term (don’t you wish you could fix other bills for 3-5 years?), however this needs to be considered against the additional flexibility offered with a variable rate, such as a 100% Mortgage Offset Account and additional repayments.
The recent growth in available houses also presents first homebuyers with a chance to get on the property ladder without blowing their budget. It’s unknown at this time whether the increase of properties over April and May will continue through 2017. The important thing to note is that there are opportunities beginning to sprout up in a marketplace that may be difficult to navigate. The experts are on your side and the time to buy may be very fast approaching.
For more information on our range of home loans, get in contact with Beyond Bank now .