Investors Make it Hard for First-Home Buyers
As a result of low interest rates, competition for properties is increasing between investors and those seeking to buy their first home.
Unfortunately for first-home buyers, the advantages are decidedly stacked on the side of the investor. Although low interest rates assist both groups to make their repayments, when it comes to a bidding war, investors usually have more power.
According to the data of mortgage broker AFG, investors were responsible for 28-50% of all mortgages processed in August across Australia.
Also, the RP Data-Rismark Home Value Index showed the strongest gain in house prices in any quarter over the last four years.
This is of course very good news for those selling properties, but not so good for those who have had to work hard to save for a deposit. Very often, these first-time buyers are forced to compete with wealthy investors, as well as an increasing number of affluent foreign buyers.
However, there are some ways that a first-home buyer can assume a competitive position in the real estate market. Having pre-approval for a loan is definitely advantageous, as is carefully choosing the area in which they want to invest. Sometimes it makes most sense to enter the property market via an area characterised by plentiful supply and lower demand.
First-home buyers also face less competition for bargain-priced properties that require a little bit of renovation work.
It is wise to develop a network of real estate agent contacts. These people can help a buyer to be aware of opportunities before they are publicly listed.