I’m thinking of buying my first property around april next year. I will be able to capitalise on the 14K FHOG.
With all the credit crunch and economic crisis is it such a good idea?
If i get in with the ‘extra 7K’ will this just be lost due to capital losses? and if the high FHOG drops back down to 7K will my lower priced property then receive much less attention from first home buyers and drop even more (7K)?
Should I just shove my money into a high interest (now low interest) savings account for the next few years and forget the higher FHOG???
Note: I am residing in western Sydney and by next april my partner and I should have about 18K deposit (+14K FHOG = 32K deposit) on ~260000 2 bedroom unit near a main western sydney train station.
Please help
Chris
Chris
Good to hear you are thinking ratonaly abot the FHO top up. I feel many are just going out and buying on the extra few bucks the Gove has given. When the Gov. lower intrest rates & give out money its for a reasion???
If i get in with the 'extra 7K' will this just be lost due to capital losses? and if the high FHOG drops back down to 7K will my lower priced property then receive much less attention from first home buyers and drop even more (7K)?
An extra 7 k will get you your curtains & a microway oven and a bit left over. So its not a big deal. Re. you question nobody has the answer. IMO I dont think house prices will race away just because of the FHO top up. A: Its only for FH buyers. B: Banks are not lending so much money. C: Job loss is now a concern.
House prices are to expensive. E. Who wants a 25 year sentance just to own your own home, you till have to maintain it, rates etc.Mate save your money, dont get sucked in to thinking you will make a profit on your home. Negative equity is common.
All the best with your desishion Chris.
T……….
Thanks Tony for your reply, you helped heaps.
The thing with the government only keeping it till the middle of next year has got me all excited and thinking whether i should jump in.
If Australia is looking to be in tougher times in the middle of next year then the government can either continue the 14K FHOG or ditch it as planned. If they ditch it the first home buyers market will dry up as credit is tightening.
This drop in first home buyers will result in the bottom of the market falling off, will this then flow through to higher priced property?
I agree with you Tony when you said that the government drops interest rates and gives money out… its too save the property market (for now).
If I was going to get into the market then I would live in it for 6 months then rent it out as my partner and i both move back with parents. During the 6 months it would be really hard, im 20 and a full time uni student, i work though (~300pw) and my partner isnt on great money… It would be a struggle.. the 400 per week for the 6 months equates to $10,400. This is the FHOG gone there, but i was justifying it that if the property goes up 5% in the first year then ill break even…. putting my money in the banking ill get a 4-5% return (though 0% real).
The 5% growth being guaranteed would get me in, but im hearing everywhere that we will have drops of 10,20,30 or even 40% (woah!!).
Hmm, if this does occur and I do just sit on my cash in the bank then when im ready to buy the property will be cheaper and I wont have to worry about a low FHOG.
Just to add one more thing… Politicians don’t want to upset people.. if they released lots of extra land then supply would rise and prices would lower…. they add the FHOG in, people are happy… if the government tries to lower the FHOG back down to 7K in mid 2009 then this will upset people wishing to get into the market and also the people owning properties in the lower brackets of the housing market as their properties will drop due to the decreased first home buyers.. Would the government lower it and displease so many people? Hmm, a bit of politics to add to the equation..
thanks Tony.
Cheers,
ChrisYou sould like you are doing the right thing "Thinking first". Yes mate it can all be a bit much at times "should I buy now get the grant or wait" . Its a difficult question. Its hard for young people to get a house now the prices are to expencive. But at 20 you have time and the best place to invest your money is in your education not the bank at 5%. The bank option is a non option at present and may get worce. You are correct the real % after inflation is 0%. IMO it shows how bad the housing market needs stimulating at cut of.75 yesterday, before 1%. More money for FHG. Share market to unstable, bank intrest too low inlation at 5%. You tell me what we should do. I dont think house prices can go much higher because no one except the rich will own one.
Mate at 20 dont be a slave to a mortgage for 30 years. We all need a place to live but think it out before you jump in & dont go in to deep. You may not need a plazma in every room a 4×4. Go with what you can afford.
All the best.
T………………..Thanks Tony,
Yes all the asset classes are looking bad at the moment. Shares?going bonkers… property?overpriced, needs alot of stimulus (lower rates, higher FHOG) to keep stable… cash?5% before tax, less after tax, pretty much negative after inflation…
Ok so i’m inclined to not get in now.. after my uni, and phd, when i start earning some good bucks will be around the end of 2013, so 5 years…
Predictions now… what is a good indicator??
– Indicator of interest rates in 5 years? (is it true that 5 year fixed int rates are what the banks think rates will be in 5 years?)
– any other indicators like that?? like a government bond or something which helps to set the interest rates?I’ve noticed that auction clearance rates over the last year in sydney have dropped from the 60s to the 40s, this is not good. I have heard that its good to get in when clearance rates are high and on the up and this is not the case in either point.
I guess I will have to forget the 7K bonus from the government and hope that property does not rise in the next 2 years.
Thanks again Tony, your views have helped heaps..
Cheers,
ChrisChris
Ive had fixed intrest for many years & Ive learnt the hard way, its save but after tax & inflation you loose. Chris you seem like a bright lad think about this; 3 things can happen up, down same. The chances of them going up like in the past is very slim (good to buy now but poor if you want an assett to go up) Going down, well its happened a bit but not like we all hopped (as buyers) for. Hence the grant. The economy in Aust. would have to go ass up bad for us to buy at 30 % off. Not likly. Stay the same. I think this is the case maybe up a bit down a bit but static. OK so if we buy now we get the new FHG, buy at a time when they are over priced, and our assett does nothing but cost us money rates, maintainance etc if we have to sell in the next 5 years you may not break even, definetly wont make money. So if you can borrow cheap (low rates) seems there on the way down then thats an advantage. You have time on your side you will see over time in the market it will increase, maybe not fast.Buying now as oppossed to 1 year ago. Now lower intrest, softer house prices not cheap but not going up like crazy & the extra 7 K. Bepends on your long term plan. I think you feel its importaint to get your foot in the door but I feel ther is no correct formular to work out when to buy as we cant tell the future.
Food for thourght mate.
Cheers
T………………..Well my long term at the moment seems to be buy property mid next year.. keep for 5 years (interest only) and build up heaps of money in the offset account. The after the 5 years i want to buy a place in the north shore area (~800K), I will have a much higher income. I would either take all the money out of the offset to use as a deposit or i would sell the current property. To have a property after 5 years which might be worth less than what i bought it for and also it costing money for 5 years doesn’t sound very logical at all. I may aswell put my money in the bank and save the deposit that way.
To buy next year would be a big risk, i could lose it.. it might go down.. it will cost me money constantly.
Thanks tony for your continued support in this thread for me. Feel free to comment more if you wish, i will stay posted…
Cheers,
Chris
House prices are to expensive. E. Who wants a 25 year sentance just to own your own home, you till have to maintain it, rates etc.You must be logged in to reply to this topic. If you don't have an account, you can register here.
