- by Sandro Bagnati
- in Home Ownership Affordability Property Investment Property Market Updates
Months later after the Elections, varying thoughts have surfaced in relation to the Melbourne housing market. Many rejoice because of newly-elected Scott Morrison’s promise to significantly ease out on owning a home, particularly to those aged between 25 and 34.
To further support this objective, Morrison suggested extra Commonwealth money which may be utilized to guarantee loans. This is to go effective when demand is greater than anticipated.
It looks promising, however, what goes beyond the facade? With the good comes the challenging part. As this article discusses both sides of the coin, is this new directive leaning towards more on the positive or the negative?
Thank you, Mr. Morrison
According to Domain, even in Australia’s expensive markets such as Sydney, Melbourne, Brisbane, and Canberra, say a newly-wed couple can only take less than two years to purchase an entry-level priced home of about $649,000. In fact, buyers in Melbourne could purchase in a little less than a year and a half. On the other hand, Sydney buyers’ home purchasing may take a year and a half, Canberra buyers about 14 months, and Brisbane just a year.
As this scheme takes into effect, first-time homeowners may enjoy the benefits of living near the city center. As the past dictates soaring Melbourne housing market prices, entry-level homeowners have no choice but to live far from their workplaces and other places of interest. They then spend on unnecessary expenses such as petrol and the like for living far.
First-time homeowners not only get to enjoy living in their own homes, but they also benefit from the convenience it brings. They get to practice independence and foresight- manipulating their own cash flow to pay off the loan over a period of time. All these possibilities may soon be realized when it starts taking into effect. Sans political motives, this housing initiative seems enticing which may have led to Morrison’s victory.
However, are these first-time homeowners aware of what this might bring in the future? Or are they just swallowed by so much excitement as purchasing their own home has been made easier?
It’s not all good news
With the advent of lower deposit requirement as pushed by Morrison’s platform, first-time Melbourne housing market homeowners may take on more debt when prices are on the decline. This substantially means falling into negative equity as the property value goes below the outstanding balance of the loan to acquire it.
In addition, according to Real Estate Business, the short-term gain may snowball into a bigger liability in the long run. These first-time Melbourne housing market homeowners may face significantly bigger monthly payments. There is also a possibility for having to pay a lot more in interest to the bank over the loan period.
Prime Minister Morrison’s plan only becomes a double-edged sword when potential buyers have not done their homework. Purchasing one’s own home may be one of the most exhilarating experiences. However, it needs significant time to study, prepare and analyze the following:
- Current Melbourne housing market trends,
- Economic stability,
- Political climate,
- Financial capacity to pay-off mortgage (long term),
- Own mindset, to decisively stick to such a long term venture regardless of any situation,
- Willingness to sacrifice- to forego unnecessary spending in favor of mortgage payments.
Playing the devil’s advocate, it is important to be fully committed. It is imperative that buyers, especially the first-time ones understand the responsibility that a home purchase entails. As such, a piece of expert advice from a reliable firm is needed in this situation- to fully prepare buyers on what they need to know and fulfill before making such a decision.
Since the article, “Melbourne Housing Market And This Year’s Elections: Symbiotic Relationship Or Antagonistic To First-time Home Buyers?” is highly applicable to Australia’s current situation following the recent elections, subscribe to our newsletter and stay in touch with us by liking our main Chan & Naylor Facebook page, the Chan & Naylor Brisbane Facebook page, the Chan & Naylor Redlands page, as well as our Linkedin, Instagram, and Twitter pages.
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