It is hardly groundbreaking to have a real estate agent recommend prospective purchasers to “act quickly” when it comes to buying a property, is it?!
But, at the risk of sounding like every other salesperson in every sales situation, first home buyers read my logic and make your own assessment. From July 1, 2017, first homebuyers will be eligible for a full exemption (currently 50%) from paying stamp duty on property purchases up to $600,000 value (partial exemption from 600k-750k), as well as a $20,000 government grant (currently $10,000) for those purchasing or building brand new homes (in Victorian regional areas – such as Warrnambool and surrounds).
These are substantial government incentives designed to encourage more first home buyers into the market, along with stimulating the many trades associated with the building industry. I believe it will work on both fronts, as have similar incentive schemes in the past.
Let’s look at established homes. On a purchase of $300,000 the stamp duty currently payable (with the 50% discount) is $5,685. This is a substantial potential saving simply for waiting a couple of weeks to purchase.
Wilson Real Estate was recently represented at a ‘First Home Buyer Information Night’ conducted by South West Credit, at the Mid City in Warrnambool. It was an absolutely full house, filled with eager potential first home buyers. Whilst I believe we will absolutely see a surge in demand from first home buyers come July 1, the prior announcement of the upcoming incentives has created a temporary decline in this demand. Property prices being governed by supply and demand as they are, logic says that as first home buyers potentially flood into the marketplace after July 1, there could be a minor spike in prices, and very soon fewer properties to choose from as supply is taken up. There is the potential for sellers, more so than buyers, to be the ones benefitting most from the new government incentives.
So, coming back to the title of this article – how best to take advantage of the situation if you are a first home buyer?
Well, given the closeness to July 1, I believe you should act now, but not necessarily formally buy now. Confused? Basically, be ready to sign a contract as soon after June 30 as possible. Get out there now and inspect properties. Get your finances in order. Do your research. With approximately 2 weeks and counting remaining, if you find the right home, at the right price, you may even be able to (subject to the seller agreeing) reach an agreement on a sale now.
The potential gain is that you get in while there are plenty of properties to choose from, and before prices possibly increase, meaning you are paying less and even maybe creating almost instant equity in your new home.
Now, with major financial decisions, I believe it is always prudent to look at the worst case scenario and make sure you are okay with it before proceeding. The potential negative is that there is no rush of demand after July 1, and prices simply remain stagnant. Here’s where it’s important that you don’t buy just for the sake of buying, and that as stated earlier you only buy if you find the right home, at the right price – and you are completely comfortable financially with the repayments, allowing for future interest rate increases and unexpected expenses. Then the worst case scenario is that you have entered the exciting realms of property ownership and taken one of the greatest possible steps toward financial independence, not to mention the pride and satisfaction that comes with buying your first home. And this without donating almost $6,000 to the government for little in return!
If you’d like to have a chat with one of our agents, and/or have a look at some potential properties, feel free to contact us any time. We’re open 7 days, till 7pm on weeknights, and our phone line (03) 5561 2777 is 24 hours.
In the meantime, here is a link to some of the properties we have for sale under $350,000. You can change the search criteria to suit your preferences/requirements.
I wish you all the best in your exciting pursuit of The Great Australian Dream!
Written by Lucas Wilson. Partner, and salesperson – Wilson Real Estate.
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