For the first time in a generation, the average size of first home loans has begun to consistently decline in Western Australia.
Peter Peard, CEO of Peard Real Estate says that significant falls in Perth property prices over the past year, have meant that first home buyers in Perth now had to take out lower home loans to purchase a property.
The latest ABS lending figures shows that the average size of a first home loan in WA was $320,800 in March 2016 compared to $342,800 in March 2015.
“Overall, the average size of a first home loans in WA has gradually fallen from a peak of $348,800 in May 2015.
“If we compare WA buyers to those in NSW, buyers here are now in a much stronger position to purchase a home as their borrowing costs are much lower.
“The average size of first home loans in NSW is now nearly $60,000 higher than in WA”, said Mr Peard.
These home loan affordability figures are welcome news for the WA property market because it means that with falling interest rates, first home buyers will underpin activity in the local property market moving forward. This in turn, will have a positive flow on effect for the rest of the market.
While the WA property market is expected to remain subdued for the remainder of 2016, the prospects for 2017 look more positive with first home buyers expected to drive the upswing in the property market.
“Astute first home buyers should take advantage of current market conditions to purchase a property now rather than waiting for a rebound in the property market when buyer sentiment is much stronger.
“Currently, there are excellent buying opportunities along the coastal strip in more affordable coastal suburbs, stretching from Clarkson in the north, to Mandurah in the south.
“In some respects, the trifecta of very competitive established house prices, record low interest rates and a large supply of homes for sale, represents a once in a life time chance for many first home buyers to purchase a home in a prime Perth location,” he said.
PETER PEARD’S TIPS FOR BUYING A FIRST HOME
* Do not make an emotional decision when buying your first home. Many first home buyers make the mistake of buying a home they ‘fall in love with’ rather than taking into account whether they can financially afford it over the long term or how much the property will be worth in five years’ time.
* Look at a wide geographic area when searching for your first home. Many first home buyers make the mistake of buying their first home within 15 kilometres of their current address and therefore overlook homes that may offer better value in other areas.
* Future capital growth potential should be a key consideration when selecting your first home because you want to buy a property that will outperform the rest of the market and deliver you the wealth creation to upgrade to a better located property.
* Use the R.C.C location rule when buying an investment property. It should be located either near the River, Coast or City. Properties in these areas generally have demonstrated higher rates of capital growth.
* Beware of buying into a location where there might be an oversupply of homes. For example, the inner city apartment market is now in danger of becoming oversupplied and this could drive down prices.
* Consider the land content of the property rather than the structure of the home. It is important to remember that land appreciates in value and buildings depreciate in value.