First home buyers dig into deep pockets at Melbourne auctions after stamp duty cuts
First-home buyers increased their spending budgets at many auctions in Melbourne at the weekend, triggering warnings they could be overpaying for lower-end properties.
First-time buyers are benefiting from extra cash from the state government’s new stamp duty concessions and were far more visible in the market on Saturday. But there were also some very competitive auctions in the $1.2 million-plus market segment, especially in the Bayside suburbs. Added to this, several properties with redevelopment potential tossed up exceptionally strong results.
The upbeat conditions saw Melbourne’s auction market record its highest clearance rate in two months – 77.3 per cent from 474 reported auctions, according to results collected by the Domain Group.
doesnt surprise me the bears are avoiding this one fellas.
it just goes to show that facts arent important to them. for the bears, the problem is a weakness of the mind. they have no courage.
but......perhaps its just the natural order of things. perhaps the bears are just destined to be the weaker member of society. the people that die poor and dont procraete.
So as predicted the 'no stamp duty rule' has re ignited the market while pushing prices up at the same time so FHB's are still paying for it through their mortgage as the auction price is now higher than it previously would have been.
So as predicted the 'no stamp duty rule' has re ignited the market while pushing prices up at the same time so FHB's are still paying for it through their mortgage as the auction price is now higher than it previously would have been.
Not really. In Qld first time buyers have been able to buy median priced homes with no stamp duty for some years, and that hasn't affected much, in fact houses are roughly half price compared to Sydney, so it must be far more than just a simple stamp duty pricing issue.
In fact if your argument was true we could then hike stamp duty to $1M and crush house prices, but no FTB would be able to buy anyway, the stamp duty would be too much of an obstacle, as it was before the discount as at 01/07/2017.
Yes thats great for QLD buyers but in Syd/Mel where the real boom has been the no stamp duty has re ignited the boom while at the same time FHB's think they can bid up more and more at auctions so they're still paying and not getting any discount afterall.
And they're also bidding at these auctions against this new breed of 'rentvestors'.
And they're also bidding at these auctions against this new breed of 'rentvestors'.
Tha most sensible way I can see for those youngs wot are strugglin' a bit but truly does wants inta tha market regardless (that I can see), pretty much remains ta buy as an owner, live in tha joint for a while (during which time ya does some low cost renos if required usin' ya own 'n/or family free labour) then move back in home wif ma 'n pa 'n rent tha joint out.
It's surely not an option that's available ta everyone of course, but for those to whom it is, it just strikes me as a way wot's very well worth considerin'.
The most important factor is APRA restrictions are starting to have an impact. APRA introduced a limit on credit growth among the big banks on investment lending to 10% in December 2014. Then earlier this year, they restricted interest only loans (the most popular option among investors).
In addition, since August 2015 the banks have been charging higher interest rates on investment loans, so not only is it harder to get finance approved, it’s also become more expensive to service. At the end of May 2017, standard variable mortgage rates were 5.3% for owner occupiers and 5.8% for investors, according to CoreLogic.
On top of this, investment is a little less attractive right now in our boom cities. We’ve had five years of very strong growth and the rate of annual capital gains is inevitably going to slow very soon. Plus, rental yields are pretty low – just 2.8% for houses and 3.7% for apartments in Sydney and 2.6% for houses and 4.2% for apartments in Melbourne.
So, it’s not surprising that on the ground we’re seeing a slightly less investor demand in the market.
According to the Australian Bureau of Statistics, investor activity during the boom (2012-today) peaked at 53% of the market in NSW in April 2015 and 46% of the market in VIC in May 2015. Today, investor activity is 46% of the NSW market and 36% in VIC. That’s still a big proportion but significantly less than the peak.
Meantime, first home buyers are back. We don’t have data yet, but it’s clear at our open houses that stamp duty cuts in both states are bringing young buyers back.
In NSW, stamp duty has been abolished on new and established first property purchases up to $650,000, with a sliding scale of concessions on properties up to $800,000.
In Victoria, stamp duty has been abolished on new and established first property purchases up to $600,000, with a sliding scale of concessions on properties up to $750,000.
So, first home buyers now have three big advantages. Not only can they save tens of thousands in stamp duty, they also don’t have to compete with as many investors and can take advantage of more favourable mortgage rates for owner occupiers.
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