Getting a foothold in the market...first home buyers vote with their feet

For first home buyers wanting to enter the property market, a decision needs to be made. The 'what' are you going to buy and 'where'.

Current first home buyers avoided the 'traumatic' period of time many existing home buyers endured, where month by month interest rates went up and so did repayments. New first home buyers are going into the market with a clean slate. Their affordability is calculated based upon current interest rates. They know no different.

However, while having a loan preapproval in hand, the types of properties first home buyers are gravitating to has changed. For a period of time, first home buyers sought to sign on the dotted line for a stand alone home or new townhouse. Often they were assisted by a First Home Owner Grant or stamp duty concession to help them buy.

However, what I am noticing for first home buyers in the current market is an uptick in the purchase of units or apartments in desirable areas.

Affordability is determining what first home buyers are purchasing. And demand is following suit with growth in the lower to middle end of the market.

Assisted by a federal government 5% deposit scheme helping young buyers to get into the market earlier with smaller deposits, many first home buyers are more open to purchasing a unit or apartment with a view that the property will be a foot hold in the market for the short to medium term.

These often are established properties rather than new builds.

These properties are not necessarily one bedroom; often they are two or even three bedroom units or smaller properties which allow couples to consider starting a family in these homes before needing to upgrade to something bigger.

Often too, there is a desire to have the capacity to still enjoy life outside having a mortgage. Some first home buyers still want the possibility of being able to travel after buying. Others wish to retain a savings buffer. So they are willing to compromise now on the type of property they are buying. This allows them to avoid what is, in many areas, a heated rental market in favour of repaying a home that is actually theirs.

There are other first home buyers too who are looking outside the square. Choosing to focus on buying an investment property as their first foray into the property market, rather than a home to live in.

Expectations have appeared to have changed as the market has changed. Demand in the lower to middle end of the market is strong where affordability constraints are not as pressing. And first home buyers are active and willing to play ball.