Many first time home buyers are ready to make a commitment to buying their own property in Sydney, but they are facing fierce competition in the Sydney market from investors. Market research shows that the first time home buyer market will increase by over 20% in 2014, reversing the slump of 2011 when just 7% were buying their first home. Their challenge will be to hold off the investors who have enjoyed the lion’s share of properties at the lower end of the market for the past couple of years.
When the first time home buyers left the market, the way was open for investors to step in and snap up cheaper properties. Here at Prudential Real Estate we were certainly aware that this was happening. Rental returns were high, interest rates were low and these factors combined to favour investors who found that many of their properties were actually cash flow positive.
Work Commitments Keep Them Close to the CBD
Many of the young buyers we speak to are motivated by rock bottom interest rates and work commitments that need them to be living close to the Sydney CBD. Government concessions and grants are now only applying to new home building, which is taking place well outside this area. Their only option is to get into the market now with an existing property, typically at the bottom end.
This will put them into direct competition with investors and we envisage a heady time in 2014 for perfect real estate Liverpool. Young professional couples have told us that they have even moved back in with parents to accumulate savings quickly. Whether this will be enough to ward off the investors remains to be seen, but it indicates to us that first time home buyers are now more serious about buying property than they have been for a few years.
Investors Currently Winning but Young Starters Still In It
In some parts of Sydney, the battle has already started, and the early news is not good for those starting out. We have clients in both groups and so far, the investors are coming out on top simply by outpricing their younger rivals. Some of our first time home buyer clients have become frustrated and are sitting out the next couple of months to see what the market does.
This does not mean they are leaving the scene for good. They know that with interest rates at historic lows, this is their best chance to secure a property. At Prudential Real Estate, we are advising our first time home buyers to know the market and have their finance approval in order, ready for any opportunity. We keep them up to date with property alerts via our website at www.prudential.com.au.