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Traditionally known as the buying season, Spring in Melbourne has once again found itself locked down for the second year in a row. The extended restrictions have grinded the Real Estate market to a holt with the banning of public auctions and in-person inspections. The impacts of these restrictions on the market have been substantial with clearance rates and property listings dropping week on week.

It’s not all doom and gloom though with many leading economists believing that prices will remain resilient through the current lockdown. ANZ Senior Economist Felicity Emmet expects prices will continue to rise however not at the same pace compared to pre-lockdown restrictions. Ms Emmett stated that although clearance rates may continue to fall with a slight drop in price gains, the housing market is likely to bounce back quickly and remain resilient to the recent challenges.

Although Melbourne clearance rates have plummeted and prices have slowed, the first half of 2021 demonstrated tremendous results. Throughout the first six months of 2021, housing values rose by 9% and units by 5.4%. Pent up demand carried over from last year, low interest rates and an increase in household savings drove property prices and price gains.

The uneven disparity seen between houses and units was driven by workplace conditions, the substantial reduction of overseas travel and international students. With many professionals working from home, the capacity to purchase in regional or outer-suburb markets is proving to be very enticing. The previous desire for many families buying within close proximity to a train station, or within a bike ride to their work is slowing dissipating. With more workplaces allowing work-from-home practices, consumers appear to be turning their attention away from the inner-Melbourne circle hence the increase in housing competition across the state. This is a good thing though, with many outer-suburb and regional communities, reaping the benefits of increased demand.


(Source: CoreLogic)

In the eyes of a First Home Buyer, the rise in housing values may seem challenging however there are a multitude of opportunities in both the purchaser and lending space. With unit prices not rising as fast as houses, and the reduction in competition from overseas and international students, opportunities are presenting themselves in this market. For those wanting to get their foot on the property ladder, the prospect of purchasing a unit or an apartment may very well be a great option.

Exceptionally low variable and fixed term interest rates are also providing great opportunities for buyers to secure cheap finance. NAB reported a 67% national jump in First Home Buyer applications throughout 2021 which is a tremendous sign that this sub-group is very much active. With the Reserve Bank of Australia (RBA) indicating that a rise in the cash rate is a long-way off, the current lending conditions remain favourable to the buyer.


What Can First Home Buyers Do Now? 

  • Talk to your Mortgage Broker to understand your current finance position and you’re your borrowing capacity
  • Understand the time parameters and requirements to getting Pre-Approved
  • Focus on savings strategies now to supercharge your deposit level
  • Understand what may hinder your chances at being Pre-Approved
  • Identify which lender is the most suitable for your given situation

If you are aiming to purchase your first home in the near future, be sure to get in contact with Tom and the team from 40 Forty Finance to map out a lending and purchasing plan.

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