First home buyers are in an impossible position

According to the Australian Bureau of Statistics, first home buyer loans underwent a modest rise following a month of record lows not seen since February 2023, but remain anaemic with only 9918 new loan commitments at the national level.

This is a drop in the ocean compared to the thousands of Australians who are currently caught up in a punishing cycle of rental increases, stagnant wages, and unaffordable housing. Those lucky enough to draw on family help now vastly outstrip those who are able to save a deposit and fund their home purchases entirely on their own.

A generation ago this would have been a rare occurrence but today's young buyers more or less need the Bank of Mum and Dad to get ahead. This is compounded by the fact that single households are on the rise even though there has been a decrease in singles buying property. More Australians are living alone or prefer to live alone but won't be able to thanks to a supply shortage which is predicted to be decades-long. First home property buyers may be at their wits end with the market, but have no choice but to carry on.

It's hard to find a silver lining when confronted with such a dire set of facts, but there are strategies first home buyers can use to keep their eye on the prize. The goal is to simply get their foot in the door, build equity, and free themselves from the rental market. To do so first home buyers need to acquaint themselves with a new set of facts: that the dream of a freestanding block with a quarter acre yard is long gone and trendy urban areas are also likely to be out of reach.

Onto the good news: though we live in unprecedented times, the nature of the market is still cyclical. There will be periods of boom and bust and plenty of opportunities for savvy buyers to swoop in to nab their ideal home. Keeping up to date with market trends helps buyers look beyond short term fluctuations to plan for the future more strategically.

Sooner or later the pendulum will swing the other way - change will kick in once supply picks up, population and thus demand for housing stabilises, and property prices near their ceiling. Market indicators are already pointing to a potential softening of house prices in the latter half of 2024.

Given stubborn inflation is refusing to budge, the Reserve Bank is likely to put interest rates on hold which first home buyers can leverage to buy before a rates cut triggers a firestorm of competition. Nailing the finances is another important aspect of preparing buyers to pull the trigger on their first home - buyers will need to exhaust all options for funding including government grants, financing, saving, and budgeting.Shared equity is a newer option on the table for those willing to take the plunge.

When it comes to finding the right property, first home buyers always stand to benefit when they cast their net far and wide. There are a great many areas which remain affordable and have lots of growth potential like Sydney's southern suburbs or bustling regional hotspots. Rent vesting may be an option in those areas. Rather than be strictly limited to new homes, which come with higher build quality risks, buyers should always consider older properties including well-built units and townhouses.

Non-traditional buying arrangements are another viable option for single buyers. Buying with friends or family can work quite well and is an increasingly common way to manage the financial burdens of buying a home.

Finally first home buyers must be open to lots of compromise. Seeking professional guidance through a buyer's agent can help them narrow down what their real needs are opposed to wants. In the property game, having a long term vision trumps emotional buying. First homes should be viewed as a stepping stone to bigger and better prospects further down the line which is why it's better to be as flexible as possible.

While it's undeniable that home ownership is significantly harder to achieve than ever before, it's critical that first home buyers stay positive, focus only on what's within their control, and be as strategic as possible. Taking a leaf out of our predecessors book, first home buyers who keep calm and carry on will be carried through these tough times onto a better tomorrow.