Easing house prices, government incentives, and a predicted interest rate cut have got experts claiming 2025 could be the year of the first homebuyer.
Ray White chief economist Nerida Conisbee said a pullback in investors and a decline in rental properties as a result of landlords selling up also bode well for those looking to get a foot on the property ladder.
“Now is a particularly good time for first-home buyers,” Ms Conisbee said. “House prices have slowed, and are in fact declining in many places, there are a wide range of first home buyer incentives at both a national and state level.
“Interest rates may be high but are expected to come down, potentially as early as February. Investors are pulling back… investor lending fell at the end of the year.”
Propertyology founder Simon Pressley agrees 2025 looks like being a big year for first-home buyers.
“During 2024, more than 117,000 Australian households became first home buyers,” Mr Pressley said. “That was up 9 per cent on the previous year.
“If the RBA cuts interest rates in 2025, we could see close to 150,000 first homebuyers for the year.”
G.J. Gardner Homes chief executive Trent Gardner said rising land costs and smaller buyer budgets had resulted in increased demand from first homebuyers for the company’s new land estates.
“Land in a typical, new land estate are tailored for low maintenance living — an attractive purchasing option for first home buyers,” Mr Gardner said.
Homeowners are waiting eagerly to see if the RBA cuts interest rates at its next meeting in February. Picture: Joel Carrett.
“The launch of our Greenfield’s design range earlier in the year provides a well-designed and well-priced product, as well as a solution for first home buyers looking to capitalise on grant schemes.”
But while some first homebuyers will be lucky enough to be able to draw upon the bank of mum and dad to help them get into the market, many will not.
So, how do you get in if you have a small deposit and a desire to get into the market?
1. Understand Government incentives
They range from low deposit schemes — where you borrow with a low deposit and don’t pay mortgage insurance, to stamp duty exemptions to cash towards buying a new home.
“All of these schemes have eligibility criteria, some only apply to new homes (to help with housing supply) and there are often price limits for the properties that are purchased,” Ms Conisbee said.
“The range of schemes can be hard to navigate so it is worth speaking to a mortgage specialist to understand what you are eligible for.”
2. Rentvesting
Rentvesting makes sense, particularly if you have a great rental deal, if you need or prefer to
be in an expensive city, or you are able to live for free with parents or family.
While you can’t access first homebuyer incentives, you can take advantage of negative gearing, which can in many circumstances be far more cost effective than accessing a first home buyer incentive, Ms Conisbee said.
3. Buying with another person
Many first-home buyer incentives have been adjusted to cater for those who would prefer to buy a property with a friend or family member, than a romantic partner.
“Financially this makes sense, but it is important to set the deal up appropriately to take into account such things as who is going to live in the property, what will happen if someone wants to sell and what to do if someone can no longer pay the mortgage,” Ms Conisbee said.
4. Buying smaller or in a less desirable area
“Your first home is not your forever home and almost every first homebuyer makes some
form of compromise,” Ms Conisbee said.
“This could include buying a much smaller home, such as an apartment or in a less desirable suburb that the one you really want to be in.”
The average hold time for a first home is generally well under seven years, by which time most make an upgrade to a better home.
5. When should you buy?
The best time to buy is when you are ready, and the earlier you buy, the easier it is to build wealth long term and have paid off your mortgage by retirement, if not earlier.
“Many people try to wait for the ideal time to buy from a market timing perspective,” Ms Conisbee said.
“This is extremely difficult, and as we have seen in recent years, even people who study the market in detail can get the outlook very wrong. Long term, it generally makes a limited difference anyway given how property markets perform over time.”
At Motion Property, we are keen to assist buyers from planning their finances to choosing their best-matched property. Our experienced property consultants are always passionate, and responsive. Reach out to us today for a quick chat!
Source: REA
