The real estate market in Australia has been on a bit of a roller coaster ride throughout the last few years with prices rising and dropping dramatically over that period of time. Prices throughout Australia continue to fluctuate depending on the region.

Many Are Not Listing If Not Necessary

The fluctuation of prices has caused many Australians to delay putting their houses on the market, adopting a wait and see viewpoint instead. Some Australians who do not need to sell their homes are waiting to see how the market will respond before making the plunge to list it. Even though the prices in Australia continue to fluctuate some areas of Australia are showing signs of recovery and hope. Still other areas are struggling significantly.

First Time Home Buyers Provide Relief For Struggling Market

The silver lining for Australian home owners who wish to sell their property has been the First Time Home Owners Grant provided by the government. This grant has allowed a great many first time home owners to afford to purchase a home. This group of people has helped to boost the sagging housing market. The low interest rates being offered have also been instrumental in helping to stabilize the housing market in Australia.

It Might Not Be Enough

Despite the benefit that first time home buyers have provided to the slumped housing economy, some experts feel that it may not be enough to really trigger a housing recovery. So far a large percentage of the purchasing activity for new and already built houses in Australia has come from first time home buyers. Some people feel that in order for Australia to really recovery from the previous housing woes that it has experienced then other buyers will have to enter the property market soon.

Sean Rasmussen
Property Options Australia
Property Options Blog © 2006 - 2008

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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.

Property Options Australia
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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In the last installment we discussed how the Government had decided to extend the First Home Buyers Grant and looked at the new figures that would be offered to first time home owners. But the grant affects more than just those who are buying new homes.

The Cost To The Government

The estimated cost to the Government to extend the time allotment for taking advantage of the grant is $539 million. The Government is hoping that this money will help to stimulate activity in the housing and construction industries providing valuable jobs for electricians, plumbers, builders and other trades people. With the global economy in a downward trend the Government hopes that the extension of the grant will help to boost the Australian economy. The Government has received praise from housing and construction groups for the move as it is expected to continue to stimulate construction and provide jobs.

The Overall Effect Of The Government Stimulus Package

Since the inception of the first stimulus package offered by the Government last October over 60,000 first home owners have taken advantage of the free money and cashed in their payments. New building approvals were on the rise for the last couple months and the Housing Industry Association stated that the policy offered by the Government has provided a modest turnaround in building approval figures.

Not All Good News

For all the good news that is reported on the boost from the Government some people do not feel that it is as helpful as it appears to be. There are always two sides to every story. Figures from the Real Estate Institute have suggested that the boost has been inflating the prices of houses around Australia with the biggest impact being seen in the lower end of the housing market.

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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