The latest happenings in the Melbourne property market. For our Essays and The Secret Agent Report, see our Research page.

Category Archives For: First Home Buyers

Buy vs Rent

One way to determine affordability is to look at the difference between renting and buying a property. A common measure throughout the world is to use the House Price vs Rent Ratio.

Just like analysing a business of a company share price,  the House Price vs Rent Ratio can help give a property buyer a measure as to whether they should buy a certain property or not.

We’ve looked at some of the key inner city areas, and the ratios that exist in each of those suburbs. The data in the table to the right has been gathered from the 1st of April to the 31st of July,  a third of the year 2012. Interesting findings are below…

  • Lowest Average Price: Kensington at $693,885
  • Highest Average Price: Hawthorn at $1,582,833
  • Lowest Average Annual Rent: Kensington at $25,351.13
  • Highest Average Annual Rent: Middle Park at $38,640.64
  • Lowest Ratio: Brunswick East at 25.08
  • Highest Ratio: Hawthorn at 45.45
  • Despite having the lowest Rent and Prices, Kensington does not appear to be the lowest ratio.

A Rent vs Buy ratio of over 31 is really making renting more favourable overall.

Going green for ‘the green’

An unusual study conducted in the U.S. by the Pacific Northwest Research station has suggested that properties with trees planted on or in the surrounding areas somehow boost the value of the property itself!

In the study, it was observed that rental units with trees on the property experienced an increased valuation of $5 monthly, $21 if the street the unit is situated on is lined with trees and as much as a $13,000 sales price hike if trees are found on the next door neighbour’s property (which was suggested by the utility of shade without the hassle of raking leaves!).

The question to ask is whether this merely relates to a desire for shelter from the meteorological elements or other intrinsic factors. Trees by themselves provide a carbon sink, absorbing carbon dioxide from the surrounding air and thus providing a more oxygen rich environment, and their root systems help to keep soil together, preventing erosion from occurring.

Additionally, on a psychological level, it would make sense that a neighbourhood adorned with healthy trees, lush gardens and well kept lawns would not only suggest that the residents love their homes and neighbourhood but that the neighbourhood as a whole is ‘of the good sort’ to live in.

Whatever the reason, and whether this study is to be believed, there would be no harm in adding a bit of flora to your properties, if not for money then for beauty.

Trulia Rent vs. Buy Index

As data management and technology get better and better,  some really interesting ways to look at values are emerging.

A favourite is the Trulia Rent vs. Buy Index, which lists American cities by were it is best to either rent or buy.

You can see the recommendations from New York to Washington DC.

I’m sure the Australian market is getting close for similar information to be available for upcoming buyers.

Stamp Duty Cut

The cut in stamp duty announced in the 2011-2012 Victorian budget will be welcomed with open arms by many first home buyers. The amount of stamp duty that a first home buyer will pay will be reduced by 20% on July 1st this year and then further drops of 10% every financial year until 2014 – a total cut of 50% by 2014.

This means that a first home buyer who purchases an established home for less than $600,000 will be entitled to a 20% cut in stamp duty and the current $7,000 first home buyers grant.

How much will a first home buyer really save? Say you purchased a home now for $550,000, you would pay $24,970 in stamp duty. With the 20% cut in July you will save $4,994 and purchasing a property for the same amount in July 2014 will see you save $12,485 on your stamp duty.

Good news for Victorian first home buyers and our property market overall.

Home buyers stike

An online campaign urging first home buyers to become a part of a ‘buyer strike’ aiming to drive property prices down has seen a number of people jump on the band wagon. The campaign has clocked up almost 5000 votes of support in just a few days.

The state of the property market at present, presents great opportunities to buyers to secure real estate at a fair price, as results and auction clearances continue to soften. Contrary to what many media reports are portraying, we really are in a favourable market for buyers.

It’s true that without first home buyers entering the property market, the market will suffer. But what will happen when all these followers are now allowed to take part in buying property again? If enough people have taken part in the strike, property prices will likely increase due to the frenzy in buying. If not, the first home buyers who pledged to strike will miss out on some good buying opportunities.

First Home Buyers to enter the market again

With help from the first home buyers grant, first home buyers fuelled the lower and middle end of the market throughout 2009 and 2010.

However the number of first home buyers entering the market has dropped dramatically within the past 24 months. In 2009 an average of 4,321 grants per month were given to first home buyers, in 2010 this figure dropped to 2,864 and in 2011 has dropped further to 2,316 – almost 50% less than in 2009.

Also interesting to note the number of those buying a new home has remained stable, however the number of people buying an existing home has halved. This drop likely due to the level of support from the government becoming less and less, especially for those looking to buy an established home.

With the introduction of 20% reduced stamp duty on July 1st this year for first home buyers, we should see more enter the market again and give a boost to the lower – middle range of the market.

First home buyer’s

First home buyers really took over the market place in 2009, with more than 190,000 Australians taking advantage of the stimulus incentives and historically low interest rate levels.

Throughout 2009 there was a 55% increase in the number of first home buyers entering the market, compared to 2008.

Despite the active first home buyer market in 2009, there is likely to be quiet a drop in market activity in this area in 2010 with the removal of the first home buyers boost.

With less first home buyers in the market, rental rates are likely to increase throughout 2010.


First home buyer grant to be phased out

The First Home Buyers Grant was cut back yesterday, as the government begins the roll back of the boost.

The grant for first home buyers was reduced by $7000 for those buying new homes and those buying established homes by $3500.

It will be interesting to see whether phasing out the grant will effect sale clearances and house pricing.

Source: Dynamic Business

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First home buyer grant

For first home buyers, it seems there is no economic gloom.

A record 4946 Victorian first home buyers applied for the government grant, during the month of May. This saw over $91 million in Victorian and Federal grants splurged on the property market.

The overall median house price for Melbourne has fallen by 4.7% in the March quarter, this compared to the 2008 March quarter. It seems this trend did not follow in outer suburbs, Craigieburn located in Melbourne's north witnessed a huge rise of 17.4% in median house price, during the same period. Melton South, in Melbourne's outer west, saw the median house price climb 11.8%.

Eight of the ten top suburbs for median house price growth, sit in known first home buyer areas.

Source; The Age 

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