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Buying a home in 2021: Here’s what's happening in the market

20 January 2021

Owning a home has long been the Australian dream, even if first home buyers today need three times the purchasing power their parents did. Still, that’s not stopping Aussies becoming homeowners – and women are leading the charge.

According to ABS data (see Table 2.15: Persons, proportion who own their own dwelling (with/without mortgage), 15 years and over, 2007–08 to 2017–18 (a) released December 2020), more women than men are home owners: 58.6 percent compared with 55.5 percent. Data gathered in 2018 by Westpac mirrors this: showing women becoming savvier and more confident about achieving home ownership.

It’s great news that women are increasingly taking the reins with their financial health and independence, especially when you consider the harsh realities facing older women now.

Research tells us that single women are more likely to face an insecure retirement and we also know that older women accessing homelessness services has spiked significantly in recent years. More recent studies also indicate that the pandemic is eroding women’s economic and financial equality.

It’s why, if you have the means, early financial planning and building wealth – particularly through property and your super – can help you create a more comfortable future for yourself.

The property market

Bushfires, floods, a global pandemic… to say 2019 and 2020 were unpredictable years is an understatement, but it’s not all bad news.

During the pandemic, first home buyers reportedly kept the property market afloat – largely due to a range of government schemes and grants, as well as low interest rates and the enforced saving brought on by lockdowns.

The First Home Loan Deposit Scheme recognises that saving for a deposit can be prohibitive for many first home buyers. The initiative enables more people to get into the market with a deposit as low as 5 percent. Roughly 12.5 percent of first home buyers secured a home in the peak months of the pandemic. The scheme continues until June 2021 and applies to new homes or a newly built home.

Has the pandemic shifted the market?

Some experts predicted that the pandemic could send housing prices plummeting by up to 20 percent or more, but that hasn’t come to pass.

In fact, house prices held steady and are increasing. New Westpac data released in November 2020 shows that the number of first home buyers looking to enter the property market in the next 5 years has jumped from 7 percent to 16 percent.

And while it’s notoriously difficult to predict what might happen with the market in 2021, some property experts are tentatively confident, pointing out that consumer confidence is building, auction clearance rates are consistently strong and banks are keen to write new business.

Should you buy?

The answer to that question depends on your personal circumstances and of course, you should always talk with a professional about what home ownership means to you financially. There are a few things to keep in mind if you’re considering embarking on the journey. Do you have a secure job or income stream? Are you confident that you can meet the repayments on a property and still cover your day-to-day expenses? Do you have the capacity to borrow? Are you willing to take on risk?

Answering yes to all of the above is a good start.

Factors in your favour as a borrower are interest rates at an all-time low. The Reserve Bank has cut the official cash rate from 0.25 percent to 0.1 percent and it’s expected to stay that way until 2024, which is giving first homeowners a serious leg up.

No one knows what might happen with the market for sure during 2021, or what JobKeeper wind backs mean for the economy, but you may find buyers holding back until the dust settles, which could add up to less market competition in the immediate term.

Home ownership: tips and strategies

You’re saving money. You’ve looked into government support schemes. You’re keeping an eye on the market, daily, and researching properties and areas you’re interested in. You want more tips on saving for a deposit and choosing where to buy. Try these

Live at home while you save a deposit: If your parents are willing, living at home can help accelerate your savings – especially if you’re not shelling out as much for rent, bills and food.

Do extensive research: Buying property is a huge commitment and you should be doing the legwork, viewing as many properties as possible and getting advice from a financial planner.

Find out how much you can borrow: Knowing your borrowing power can help you figure out what types of properties you can afford – use a borrowing calculator like this one.

Set a savings goal: Figuring out how much you need to save and how long it will take you is a key – then you should prioritise your goal and give yourself a deadline on meeting it.

Consider rent-vesting: Renting where you want to live and investing where you can afford to buy is a realistic option for many and it may get you onto the property ladder sooner.

Planning is key. Make your goals achievable and reward yourself when you reach various milestones along the way.

Want to find out more about saving a deposit, buying your first property or applying for a mortgage? Check out more articles in our content hub.

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