Residential property down under is becoming more and more expensive. Residential property prices across Australia broke a 17-year record with an annual increase of 13.5 percent, the highest since 2004. National prices showed a monthly increase of 1.9 percent. Darwin showed the highest annual price increase at 21 percent, closely followed by Hobart at 19.6 percent
For monthly price increases in June, however, Hobart led at three percent, followed by Sydney at 2.6 percent. Houses became more expensive compared to other housing units, with a 15.6 percent price increase. Prices of other housing units increased only by 6.8 percent.
Eliza Owen, head of research at CoreLogic, stated that the rise in prices in the first six months of 2021 was due to strong demand. This in turn came from accumulated savings during the COVID restrictions in 2020, decreased unemployment that raised consumer confidence, the persistence of extremely low mortgage rates, and low housing stock.
She highlighted, however, that for the first time in nine months, price increases at the high end of the market have not accelerated. She sees this as a sign that the momentum is shifting because the rest of the market usually follows.
Sales Performance of the Residential Market
ABC News reports that according to CoreLogic, in the second quarter of 2021 there were about 126,000 new residential property listings but total sales were for 167,000 properties, leaving the inventory even lower than it was before the new listings. The total advertised stock of residential properties in the 28 days up to June 27 was 24.4 percent below the five-year average. The low supply and high consumer demand create a sense of urgency among buyers, Owen said.
The number of residential sales in the last financial year also broke a 17-year record, according to CoreLogic. About 580,000 properties sold, the highest sales since early 2004. Among these, 110,000 sales were in Sydney, 89,000 were in Melbourne, and 81,000 were in regional Queensland. Not only was Sydney the busiest market but it was also the fastest-growing, with quarterly growth of 8.2 percent in the first quarter of 2021.
Seek Programs for Homebuyers
There is good news for low-income and medium-income first-home buyers, though, as well as single parents. Check if you will qualify for any of the government programs that specifically aim to help people from this sector own homes.
In the First Home Loan Deposit Scheme (FHLDS), eligible buyers only need to put up a five percent deposit on a loan because the National Housing Finance and Investment Corporation (NHFIC) guarantees up to 15 percent of it. The buyer does not need to pay mortgage insurance either. There are 10,000 slots every financial year.
To qualify, you must be an Australian citizen aged 18 and older and must not have previously owned any property in Australia. Single applicants have a cap of $125,000 taxable income per annum while couples have a cap of $200,000 taxable income per annum. Approved buyers must occupy the purchased property as their residence. Eligible properties under the program are existing houses, townhouses, and apartments; off-the-plan townhouses or apartments; house and land packages, and land plus a contract to build on it.
The New Home Guarantee is similar to the FHLDS, even in the eligibility of applicants. The New Home Guarantee is an extension that adds 10,000 new loans from July 1, 2021, to June 30, 2022. The difference is that approved buyers are not allowed to purchase existing homes but only newly constructed homes. They can also build new homes on available land.
Approved buyers must enter into a contract of sale within 90 days of preapproval. A new dwelling must have been built on or after January 1, 2020. For off-the-plan residences, the contract of sale must bear a date on or after October 7, 2020. Vendors must construct within 12 months of the contract of sale and finish within 24 months. Approved builders must engage in an eligible building contract within three months after being pre-approved, build within a year, and finish within 24 months.
The Family Home Guarantee has 10,000 loans available from July 1, 2021, to June 30, 2025, for single natural or adoptive parents caring for at least one dependent child. Eligible are Australian citizens aged 18 or older who do not currently own any real property in Australia. Having previously owned property is allowed. The approved buyer only needs to put up a two percent deposit because the NHFIC guarantees up to 18 percent of the loan.
Eligible properties are similar to the FHLDS, and the approved buyer must also reside in the purchased property. There is a cap of $125,000 taxable income per annum, but this excludes child support payments received.
If you meet the eligibility requirements, go and file your application now. Do not wait until all available slots are filled up.