If you are thinking of purchasing your first home, you can be forgiven for putting it off from fear you won't find your ideal home at your ideal price.
There is a lot in the press at the moment that first home buyers are being driven out of the market by rising property prices.
And while there is no denying that prices have climbed considerably over the last 24 months, new data shows property values are starting to stagnate, which should be seen as good news by first home buyers.
Property values are stagnating
Over the 12 months to July 2014, property values climbed by 10.1 per cent across the combined capital cities – with Sydney and Melbourne leading the charge.
According to research conducted by RP Data, dwelling values have surged by 15.4 per cent and 9.4 per cent in Sydney and Melbourne respectively.
While this sounds like very impressive growth, the reality is there are signs that property values are starting to stagnate.
RP Data found property values climbed by just 1.4 per cent across the combined capital cities in June – after posting a 1.9 per cent drop in May.
Moreover, over the June quarter, property values are actually down 0.2 per cent.
Interest rates still low
On top of this, it is important to note that interest rates continue to hover around record lows. And, according to the Reserve Bank of Australia, interest rates could remain low for the foreseeable future.
In its June Board meeting minutes, the Reserve Bank said the significant amount of monetary stimulus in place meant the most prudent course of action is likely a “prolonged period of interest rate stability”.
First Home Buyers in the Future
Despite this, many potential first home buyers are still being scared off and intimated by the level of buyer competition. And while there is no denying that the property market is currently quite competitive as home buyers and investors look to take advantage of stagnating prices and low interest rates, financial experts believe the lack of first home buying activity is normal and based on cyclical trends. According to various financial experts, there will be a time when first home buyers are on top again.
That said, if you are planning on jumping into the property market for the first time, you don't have to delay your purchase until first home buyers are back on top. Buyers who are dedicated to saving for a down payment and have the discipline to stay within their price range when shopping for a home are still able to make purchases in desirable areas across the country.
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