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Suburbs that Qualify for the First Home Buyer Scheme

Suburbs for First Home Buyer Scheme - Investors AdvisorsThe housing market has shown a robust performance, despite the shock of Covid-19 which has created new opportunities for buyers.

The pandemic has impacted pockets of the housing market, where median values have dropped below the first home loan deposit scheme thresholds.

Recent housing value declines are particularly prominent in major cities like Sydney and Melbourne.

These cities accounted for around 75 per cent of international migration across the capital cities in 2018-19, meaning international border closures have created a particular demand shock.

On Wednesday, the minister for housing announced around 1,800 places would be re-issued from the first round of the first home buyer scheme.

This means recent value falls may have created an opportunity for first home buyers, where there is a maximum purchase price cap to qualify for the scheme.

As of January 2020, there was an average of 1071 suburbs observed in the capital cities with a median value at or below the qualifying threshold, assuming the application is for established property.

 

Established property has historically been favoured by first home buyers where benefits for both new and established property have been available.

That was further demonstrated in the slower utilisation of the scheme when it was made available for only new property.

Corelogic median dwelling value data reveals city suburbs where the median value fell below the established property price threshold since the onset of Covid.

This effectively looks at the change in the median value of all houses or units across a suburb between March 2020 and January 2021.

Note suburbs analysed include where Corelogic has high confidence in the median value, and there have been at least 50 transactions across the suburb over the past 12 months.

Suburbs that Qualify for First Home Buyer Scheme
SuburbCityMedian Value Jan 2021Median Value Mar 2020
KellyvilleSydney$675,785$747,661
Rouse HillSydney$638,755$726,900
ArncliffeSydney$690,441$721,626
HurstvilleSydney$651,924$716,943
AshfieldSydney$689,884$717,949
StrathfieldSydney$688,341$746,239
Wentworth PointSydney$686,114$715,019
GladesvilleSydney$698,034$751,558
RydeSydney$678,719$714,899
CaringbahSydney$679,373$717,427
KirraweeSydney$671,313$707,328
BalaclavaMelbourne$598,36$618,291
BrunswickMelbourne$579,828$608,147
DocklandsMelbourne$575,517$616,196
South MelbourneMelbourne$596,486$645,924
St Kilda EastMelbourne$579,514$613,683
ThornburyMelbourne$584,288$611,704
Ferntree GullyMelbourne$576,076$600,439
Beaconsfield UpperMelbourne$573,562$601,703
ClaytonMelbourne$570,988$636,567
OakleighMelbourne$575,210$628,533
South BrisbaneBrisbane$468,672$483,277
MunsterPerth$397,318$446,353

 

The list comprises 23 suburbs across the four largest capital cities.

In each of the suburbs, it is unit medians that have slipped below the threshold.

Unsurprisingly, six of these include unit values in the Melbourne–inner region, where median values have declined an average – $33,313 between the onset of the pandemic and January.

As noted in previous research, the inner region of Melbourne has seen particularly severe declines in rent and property values since the onset of the pandemic.

This is because the Melbourne-inner region has historically had particularly high exposure to housing demand from overseas migrants, such as international students, as well as people employed in tourism, hospitality and the arts.

Both cohorts have been particularly affected by the pandemic.

The same trends may explain the decline of median unit values in South Brisbane, where inner city Brisbane has also seen relatively high levels of overseas migration as a component of population growth.

While the impacts of Covid on some markets has seen a decline in values, upward pressure on prices may result from the resumption of interstate and international travel, as well as continued improvements in the Australian economy.

As more of the housing market is caught in a broad-based upswing, first home buyers could face more challenges getting into the market in the year ahead.

 

Data Source: theurbandeveloper.com

 

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Federal Government extends HomeBuilder program for another three months but at a lower rate

HomeBuilder Program Extends for 3 Months -Investors Advisors

 

 

A Federal Government program offering cash grants for housing construction projects has been extended, but at a lower amount.

The HomeBuilder scheme currently provides $25,000 grants to eligible people building a new home or renovating an existing one.

It had been due to expire at the end of the year but will be extended to 31 March, 2021, at the lower rate of $15,000.

Prime Minister Scott Morrison said the extension was expected to lead to another 15,000 construction projects, bringing the total anticipated renovations or builds under the program to 42,000.

“Extending HomeBuilder will mean a steady pipeline of construction activity to keep tradies on the tools.”

 

Price caps and time limits changed

Property price caps for new builds in two states will be lifted for contracts signed between January and March next year, rising to $950,000 in New South Wales and $850,000 in Victoria.

The amount of time all approved applicants who signed contracts on or after June 4, 2020, are given to start construction will also be extended, from three months to six months.

The decision follows calls from the construction industry for more flexible deadlines, with concerns people could miss out due to a bottleneck of applications.

The Federal Opposition had also called for changes to the program, arguing it had failed to deliver on its promises and amounted to a “marketing exercise.”

The changes have been costed at $240 million, bringing the total expected price tag to $921 million.

Of the around 24,000 applications made to the scheme so far, the majority (19,180) are for new builds while the rest (4,697) are for renovations.

 

SOURCE: abc.net.au

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First Home Loan Deposit Scheme (New Homes)FACT SHEET

What is the First Home Loan Deposit Scheme?  

The First Home Loan FHLDS New Homes Fact Sheet - Investors AdvisorsDeposit Scheme (FHLDS) is an Australian Government initiative to support eligible first home buyers to build or purchase a new home sooner. The Scheme is administered by the National Housing Finance and Investment Corporation (NHFIC). Usually first home buyers with less than a 20 per cent deposit need to pay lenders mortgage insurance. Under the Scheme, eligible first home buyers can purchase or build a new home with a deposit of as little as 5 per cent (lenders criteria apply). This is because NHFIC guarantees to a participating lender up to 15 percent of the value of the property purchased that is financed by an eligible first home buyer’s home loan.

What is the First Home Loan Deposit Scheme (New Homes)? 

In the 2020-21 Federal Budget, the Australian Government announced an additional 10,000 FHLDS places for the 2020-21 financial year, specifically for eligible first home buyers building or purchasing new homes. These additional places are known as the First Home Loan Deposit Scheme (New Homes) or FHLDS (New Homes).

How does FHLDS (New Homes) work?

Eligible first home buyers looking to build or purchase a new home are able to apply for a loan to purchase an eligible property through a participating lender during this financial year (ending 30 June 2021). Eligible borrowers can use the guarantee in conjunction with other government programs like the First Home Super Saver Scheme, HomeBuilder grant or state and  territory First Home Owner Grants and stamp duty concessions. The guarantee is not a cash payment or a deposit for your home loan.

What types of properties are eligible?

Eligible FHLDS (New Homes) properties include:

  • newly-constructed dwellings
  • off-the-plan dwellings
  • house and land packages
  • land and a separate contract to build a new home.

A newly-constructed dwelling can also be one where a home has been substantially renovated, or knocked down and rebuilt, by the vendor – thus creating a ‘newly-constructed dwelling’.There are particular requirements which apply for each type of property. Contact a participating lender for more details.

What are the timeframes for FHLDS (New Homes)?

If you are purchasing a new home:

  • you must enter into a contract of sale to purchase your new home within 90 days of being pre-approved
  • for an off-the-plan property, the contract of sale must be dated on or after 7 October 2020. Generally, the building of your off-the-plan property must start within 6 months and finish within 24 months.
  • for a newly constructed dwelling, the dwelling must have been completed on or after 1 January2020.

If you are building a new home (either under a house and land package or as a land and separate contract to build a home):

  • you must enter into an eligible building contract within 90 days of being pre-approved; and
  • you must start building within 6 months of entering into the eligible building contract and finish building within 24 months of starting.

What property price thresholds apply for FHLDS (New Homes)?

FHLDS (New Homes) assists in the building or purchase of a new home. The value of the new home must not exceed the relevant price cap for the area in which it is located. The price caps for capital cities, large regional centres and regional areas are on the following page.

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Who is eligible for FHLDS (New Homes)?

  • Australian citizens who are at least 18 years of age. Permanent residents are not eligible.
  • Single applicants with a taxable income of up to $125,000 per annum for the previous financial year and couples with a taxable income of up to $200,000 per annum for the previous financial year. For all FHLDS (New Homes) applications made to 30 June 2021, the relevant financial year assessed will be 2019-20.
  • Couples are only eligible for FHLDS (New Homes) if they are married or in a de-facto relationship with each other. Other persons buying together, including siblings, parent/child or friends, are not eligible for FHLDS (New Homes).
  • FHLDS (New Homes) assists single (individual) applicants and couples (together) who have at least 5 per cent of the value of an eligible property saved as a deposit. If 20 per cent or more is saved, then the home loan will not be covered by FHLDS (New Homes).
  • Loans under FHLDS (New Homes) require scheduled repayments of the principal and interest of the loan for the full period of the agreement, which will need to be for a term of 30 years or less, (with limited exceptions for interest-only loans, which mainly relate to construction lending).
  • Applicants must intend to be owner-occupiers of the purchased property. Investment properties are not supported.
  • Applicants must be first home buyers who have not previously owned, or had an interest in, a property in Australia, either separately or jointly with someone else (includes residential strata and company title properties).

How to apply

Eligible first home buyers can apply for FHLDS (New Homes) through a participating lender. The full list of participating lenders is at link.

  • First home buyers are responsible for meeting all costs and repayments for the home loan associated with the guarantee.
  • All applications for the FHLDS (New Homes) need to be made directly with one of the Scheme’s participating lenders. NHFIC doesn’t accept applications directly from first home buyers.

DATA SOURCE: www.nhfic.gov.au

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Families on an average wage of $86,000 can afford to buy a home in Sydney’s cheapest suburbs

Falling prices have made homes across much of Sydney­ affordable again for middle-income families.

Homes in western suburbs like Kingswood, St Marys, Liverpool, Granville, Punchbowl and Harris Park are back in reach for families on Sydney’s average wage of about $86,000 a year.

Typical properties in those areas went beyond the budgets of average wage earners when prices hit a peak in mid-2017 — and the required mortgage repayments on a median-priced house would have eaten up more than a third of the buyer’s income.

Such a situation, known as “mortgage stress”, generally precludes banks from issuing a loan.

But prices have dipped below the middle-income mortgage-stress threshold over the past year.

For instance, a couple on as little as $27,354.50 each or $526 per week — a combined income of $54,709 — could buy a property in Carramar.

Demographer Bernard Salt said the improved affordability was a welcome change, particularly for Millennials­ who had lost hope of buying when the market was booming.

“Prices were rising faster than they could save and faster than their wages were increasing,” Mr Salt said. “It’s now moving in reverse … more young Aussies can get into the market if they have the willpower to save.”

Granville had one of the most notable improvements for buyers, analysis of mortgage data and CoreLogic median prices shows.

A typical Granville apartment which cost about $542,000 in 2015 now costs $487,500.

A buyer using a loan with a 4.8 per cent ­interest rate, with a 20 per cent deposit, would pay just over $2000 a month in mortgage repayments — which would be considered affordable on an $86,000 a year salary.

The median price of a Punchbowl unit fell from $531,000 in mid-2017 to $487,500 now, while the Liverpool median unit price has come down from $505,000 to $460,750.

Suburbs in Sydney’s inner west recorded even bigger price drops and, while they remain largely out of reach for average earners, look set become to more affordable­ soon.

The median apartment price in Newtown fell 18.4 per cent from $817,250 to $666,500.

First-home buyers have capitalised on the lower prices, with ABS mortgage data showing first-time buyer participation in the market hit a six-year high at the end of 2018.

Thomas Latty, 21, was surprised to find he could afford a deposit. He recently returned from a European holiday with some leftover cash and, after checking ­prices for units in Penrith development East Side Quarter, realised he could afford to buy right away.

“I’d thought it would take me a few more years,” Mr Latty said.

Reinald Struwig and Natalie­ Byrne recently bought their first home in Marsden Park after consulting with Smartline broker Michelle Schaafsma and realising their dream of home ownership was more within reach than they realised.

“The market wasn’t overly competitive,” Mr Struwig said. “It felt like we were in a good position as first-home buyers.”

Urbis economist Alex Stuart said buyers were benefiting­ from a drop investor activity, which was the primary driver of the boom in prices from 2014-17.

Investors have been struggling to get financing due to a clampdown on investment lending.

“First-home buyers are not up against as many other buyers anymore,” Mr Stuart said.

“First-home buyers are also getting a lot of help from (government stamp duty) incentives and that’s made a huge difference.”

This article was originally published in www.realestate.com.au . Here’s the link to the original article: https://www.realestate.com.au/news/families-on-an-average-wage-of-86000-can-afford-to-buy-a-home-in-sydneys-cheapest-suburbs/

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There’s one thing this expert says you should do before buying a house

1 Thing Experts Say You Should Do Before Buying a House

IT’S the debt we all like to forget we have, and Australians owe a combined $48 billion.

But while a HECS or HELP balance is the best debt you can have, given that it doesn’t attract interest, ignoring it could harm your finances in less obvious ways.

And you might want to think about paying it off before you saddle yourself with a home loan, Finder money expert Bessie Hassan suggests.

“Even though this is no-interest debt and therefore better value than commercial interest-laden debt, it’s still a good idea to clear it as early as you can and before you look to acquire any further debt, as further debt will be more expensive to pay back and therefore more difficult to clear,” Ms Hassan said.

And, she said, your HECS debt could impact on how much the bank will lend you to buy a house or car, because your income is reduced by the repayments taken out of your wage each week.

“It’s worth considering paying off this HELP debt as soon as possible to rid yourself of the burden of having an incremental chunk of your wage being taken out every year,” she said. “This can make you more attractive to a lender.”

If you are paying the minimum amount off your student debt while you earn the median full time wage of $82,804, you’ll have $5382 taken out of your pay each year. For those who fall into the $95,627 to $101,899 income bracket, the maximum annual repayment is $7642.

An analysis of ATO data by finder.com.au found that the amount of HECS and HELP debt has doubled in size in the five years from 2011 to 2016, rising from 1.6 million Australians owing $22.6 billion to 2.5 million Australians owing a mountain of debt valued at $47.9 billion.

Almost half a million of them owe more than $30,000, accounting for about 46 per cent of all HELP debt.

“This number keeps creeping up, and it could take graduates years to repay,” Ms Hassan said.

Until January this year, those who opted to make extra payments towards their debt were given a 10 per cent discount, but this incentive was abolished by the Turnbull Government.

THE GREAT HOME LOAN CHALLENGE

As young Australians battle to enter the housing market, with rising property prices making the task of saving a deposit ever more challenging, it seems counterintuitive to put extra cash towards paying down a debt that only increases in line with the cost of living, measured by the consumer price index (CPI).

That’s about two per cent a year under current economic conditions; compared to a personal loan, on which the banks will charge about 12 per cent a year in compounding interest, it’s a very good deal.

And, despite calls for reform, your HECS dies with you; when you pass on, your debt is wiped and it is not passed on to your estate.

But, Ms Hassan said, paying it down before you pursue the home ownership dream may still be worth it.

“Once your HELP debt is paid off, you’ll be keeping more in your pocket from what you earn at work — and potentially get a larger tax refund,” she said.

“While this may not seem like much, this could be the shortfall in completing a deposit on a loan.”

The extra cash could make it easier to both save for a deposit, and service a home loan, depending on “your income, the amount of other liabilities you have, and the property purchase price.”

“Making extra voluntary payments can be good if you have no other debts and if you have spare cash to put towards your student debt,” Ms Hassan said.

“On the flip side, if you have other debts, such as a personal loan or credit card, you should work on servicing this debt first as you’ll be charged interest.”

It only becomes compulsory to start paying off HECS or HELPS debt once income exceeds $54,869, a threshold that is adjusted each year.

Australians can make a voluntary repayments on their HECS or HELP debt at any time through their tax returns.

While no interest is charged on the debts, they are indexed on June 1 each year to keep pace with inflation.

 

Original Post: Here

Written by Dana McCauley, from www.news.com.au.