The First Time Home Owners Grant has provided a much needed boon to the Australian economy and has helped many Australians realize their dream of purchasing their own home But recent changes to the lending conditions may hurt potential first time home buyers making it more difficult to get that new home that they have been dreaming of.

New Lending Conditions Put A Damper On Home Ownership

New lending conditions are now requiring that first time home owners show evidence of regular savings over a period of time. Many lenders are also requiring a deposit of five per cent or more of the purchase price in addition to any federal and state given government grants. New homeowners will also be required to pay for any costs related to the purchase of the property.

Currently the First Home Owners Grant as provided by the government is $14,000 for homes that are already built and $21,000 for newly built homes. Under these new conditions potential first time home owners may once again find it difficult to afford to buy a new home. A first time home buyer who is looking at a property that costs $300,000 would be expected to pay between $15,000 to $30,000 plus additional fees when purchasing their home in addition to any Government grant money.

Preventative Measures To Prevent Economic Deterioration

The new conditions being placed on first time home buyers are a way to get back to the old days when the approval of property loans was dependent upon the new owner having cash up front. Many lending institutions would like to do away with 100 per cent financing loans altogether and have the 90 per cent loan the maximum amount able to be borrowed for a loan to value ratio.

Property Options Australia
Property Options Blog © 2006 - 2009

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In our first installment we looked at the trend of unlikely areas receiving an upswing in home sales and interest as a result of the First Home Owners Grant and boost. Here we will continue to explore this unusual and interesting phenomena.

First Time Home Buyers Make Up The Bulk Of Those Purchasing Real Estate

First time home buyers are making up a large percentage of house hunters right now as a result of the Government First Home Owners Grant. First time home owners can get an added boost of $21,000 for newly built homes and $14,000 for already existing homes through the end of September.

Extra Money Helps New Home Buyers Afford A New Home

This extra bit of money offered to first time home buyers has helped many of them to realize their dream of owning a home and has also helped to stimulate the market in lower end areas that were faltering before. These areas tend to be more affordable to people who are taking advantage of the first home owners grant money. The faltering upper end of the market has only increased the boost to the lower end of the market.

Lower Interest Rates Add To Market Boost

Another reason why the lower priced housing market is seeing such an increase in property sales is due to lower interest rates and a desire by many Australians to have smaller homes and easier to manage mortgages. These factors help to boost the sales on the lower end market homes. These same factors are hurting houses that are priced on the higher end of the market. Houses with as price tag of 1 million dollars or more have seen a significant decrease in sales over the last year.

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Property Options Blog © 2006 - 2009

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The First Home Owners Grant has helped many first time home buyers in Australia get into their very first home. And it has caused quite a stir throughout the real estate world as realtors and mortgage companies as well as banking financial institutions try to evaluate the effect that the grant is having on the overall real estate market in Australia.

An Upswing In Less Popular Areas

The property in upmarket suburbs of Australia has been on the decline in recent months. And while these areas are still declining, the less popular suburbs and areas that have been neglected or over looked in the past are getting a lot of attention from first time home buyers. While the million dollar suburbs are seeing a decline in property value and appeal, the suburbs such as Mansfield Park, Ottoway, Port Adelaide, Enfield, Caboolture have all seen capital gains of more than 20% over the course of the last year for homes that sold for less than $350,000.

Increase Due To Better Affordability In Previously Overlooked Areas

One obvious reason why the above mentioned areas are doing so much better than the more affluent areas of Australia is the more affordable purchase price. But another reason why these areas are receiving so much attention is due to the types of people who are looking. First time home buyers who have been scrapping money together to purchase their new home typically do not have the funds needed to buy higher end homes in affluent upscale areas. And since first time home buyers are such a big part of the house hunting group presently this makes it harder to sell those higher end homes.

In the next installment of this series we will look at some other factors that are involved in the surge of home buyers in unlikely area.

Property Options Australia
Property Options Blog © 2006 - 2009

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The Federal Government recently announced that they will be extending the First Home Owner Boost through to the end of the calendar year. This means that first time home buyers will be given an additional six month to take full advantage of the free government stimulus money being offered.

Good News For First Time Home Buyers

The ability to cash in on free government grant money to purchase a new home is one that many first time home buyers do not want to pass up. With the original deadline of June 30th fast approaching there was much debate and discussion about the possibility of extending the deadline to give more first home buyers a chance to take advantage of the money provided. Even though the deadline has been extended the news is not all good.

Amount Of Funds Offered Diminishes As Year Comes To An End

In extending the deadline the Government is hoping to allow more first time home buyers to get a helping hand with the purchase of their new home. But waiting until the last minute to cash in on this great deal will cost you some money. Starting in October the benefit offered will be halved.

The existing First Home Owner’s Grant will stay the same, providing $7000 to new home owners who purchase a home that is already built, and $14,000 to those who build a new construction home. Starting October 1st the Government will provide new home owners with a modest $3500 for existing homes and $7000 for newly built homes.

Breaking Down The Numbers

When combined with the First Home Owner’s Grant first time property owners will be getting $10,500 for existing homes and $14,000 for newly built homes, down from the previous $14,000 for existing homes and $21,000 for new construction that is currently being offered. This change will occur on October 1.

Property Options Australia
Property Options Blog © 2006 - 2009

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Many Australians have been taking advantage of the Federal Government’s first home owners grant of $14,000 for a pre-existing home and $21,000 for a new construction home. The offer from the Federal Government is just too good for many Australians to pass up and has provided a way for many people to get into their first home more easily. But there could be trouble on the horizon. Research has shown that in the rush to take advantage of free Federal money one in five new home owners has gotten in over their head and may have trouble repaying their loans.

Mortgage Statistics

According to recent research by market analyst Datamonitor 30% of people who purchased a home in the last year by taking advantage of the first home owners grant are experiencing mortgage stress and 21% of new home owners stated that they expect to have difficulty repaying their mortgages over the course of the next five years. In addition over one fourth of the new home owners are spending more than 30% of their income on mortgage repayment and servicing loans.

Buyers Desperate To Cash In

Many first time buyers are feeling the pressure of the approaching June 30th deadline for the grant. This can lead to a sense of desperation and anxiety over trying to get in under the wire which is causing many first time home buyers to really feel the stress of the situation. The limited number of homes that are available and the rising cost of rent only fuel the desperation of house seekers. This situation has led many first time home buyers to purchase a property that is over their budget and over their head in expenses.

Property Options Australia
Property Options Blog © 2006 - 2009

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