This week the Federal Government announced a doubling of the First Home Buyers Grant to $30K which has sparked lots of media commentary on this action that is nothing short of stupid, and unhelpful at best. It’s what we’ve been expecting of the government; more poor decisions that fail to help those in need and…
This week the Federal Government announced a doubling of the First Home Buyers Grant to $30K which has sparked lots of media commentary on this action that is nothing short of stupid, and unhelpful at best. It’s what we’ve been expecting of the government; more poor decisions that fail to help those in need and make it harder for those who can make meaningful change.
As we’ve said many times, you can’t fix a supply-side issue with a demand-side solution, but that’s exactly what this grant is trying to do. Plus, with limited supply and an inability to increase the speed of delivery, this grant only adds to the demand, increasing the imbalance and pushing prices up again.
What it means for investors is a short timeframe before prices rise once again and increased competition on the property types that are going to bring the best returns.
For those looking at buying their first home, or if you’ve got friends and relatives wondering if this grant boost is going to help them, we suggest it probably won’t. Firstly, the grant amount, while it seems large at first look, is going to quickly mean very little as the government has also made decisions that will mean the average cost of a build is likely to increase by $30K next year. So, first home buyers, you have a very small window in which to have any real meaning.
This is another reason why investors should make their moves now before it costs more.
At the end of the day the story doesn’t change, we have been predicting this, just like the price rises through COVID-19, and prior to that, the undersupply that we have been talking about for the last 10 years. Since September last year, we have been talking about how by the end of 2023 and probably in the last quarter we will see prices start to run again. At the same time, the rest of the world was telling us that our prices were coming back and we were going to continue to fall and how far the market might drop by as much as 20-30%. We have been proven right despite what the larger market commentary has been saying yet again.
The market never truly fell, the medians came back fractionally and now have caught up to where they were. We never rely on medians because they don’t tell the full story. What really happened was just a change in the property type that was selling throughout the year and in what parts of the market, which impacted median records. True prices continued to rise through that whole time despite interest rate rises. While we were right and the general commentary was wrong, once again, it comes down to understanding the fundamentals of what’s actually driving this market.
So, what are we saying now? We believe in a robust increase of prices in 2024 and 2025 peaking in 2026. That doesn’t mean prices will come back in 2026, it just means that the rate of growth will slow again for a while. What that means is, that the people who will make the most money out of property in that period of time are the ones who already own it or the ones who are buying NOW.
There are more people in Australia than there are homes to live in and the imbalance is only going to get worse, which presents an excellent opportunity for investors to help house people and build wealth at the same time. For the greatest opportunity to build wealth, don’t wait until the next property run takes off, the journey needs to start now if not already underway.
Talk to our team of property coaches to see what’s possible now for you so that you can make the most of this next property season.