Have you been looking to purchase your first home, but found yourself missing out because investors with deeper pockets have had the ability to outbid you? 

This has not been an uncommon situation. According to the Australian Bureau of Statistics (ABS), the monthly value of housing financial commitments from investors has risen from around $6 billion in July 2011 to well over $13.5 billion just four years later.

Meanwhile, first home buyers make up for about 15.4 per cent of total owner-occupied spending (roughly $19 billion), which amounts to around $2.9 billion.

In these kinds of conditions, it can be easy to become disheartened. However, you may have heard at the end of 2015 commentary on a few factors affecting the property market, not necessarily bad for those of you looking to become first home owners in 2016. 

What has happened and where is it heading

Of late, the property market across many parts of Australia has been untouchable for first home buyers, with figures from the ABS revealing that real estate prices in Sydney skyrocketed 18.9 per cent in just the 12 months to June 2015. Melbourne and Brisbane posted 7.8 per cent and 2.9 per cent respectively, which is still substantial. 

Although demand is exceeding in the property market and continuing to keep conditions favourable for vendors, overall there has been a shift with a combined capital city auction clearance rate falling to 62.1 per cent for the December quarter of 2015, the lowest level since 2012. 

Source: Domain 

Increased supply

The number of auctions held in September 2015 were up 31 per cent in comparison to 2014 and this combined with auction clearance rates being so low, means there are fewer homes meeting their reserve price, indicating less demand and competition, which allows buyers more leverage.

Bank lending restrictions taking hold

The Australian Prudential Regulations Authority recently announced an increase in the amount of capital required to take out a mortgage from the major banks. 

In a September 26 article from Domain, Clare Rutledge, head of Urban Living by LJ Hooker, affirmed that the restrictions are beginning to make an impact, with first home buyers showing more confidence.

"The effect of the new bank lending rules is starting to trickle down and investors aren't so heavy on the ground now," she said.

Record low interest rates remain

At its most recent meeting, the Reserve Bank of Australia declared the official cash rate would stay at the historically low level of 2 per cent, where it has been since May 2015.

"Low interest rates are acting to support borrowing and spending," said RBA Governor Glenn Stevens.

This essentially means home loan repayments are easier to manage for first time buyers, particularly when first home owner grants (these vary state from state) and the aforementioned factors like increased affordability are added to the mix.

So, if you have been searching for your first home for a while, make sure your finances are in order and be sure to get in touch with our team as now could be your time!

About the Authors

Katherin Dermanis

Katherin is the Principal of LJ Hooker Home Loans Northern Beaches, Sydney. Katherin manages a team of highly experienced and qualified loan writers with a goal to secure the best loan for clients particular needs, specialising in both residential & commercial finance.

Alex Ippolito

Alex is the Principal of Achieve Finance, leading mortgage advisor, broker and lending specialist located in Brookvale on Sydney's Northern Beaches. Alex's client success is due to his thorough knowledge, extensive experience and focus on developing strong relationships with clients and complementary property and loan industry experts.