Market shift: Why now is the time for first home buyers!

We’re no strangers to media appearances, but recently one of our founders had an exciting first—being invited to speak live on TV! The topic was something close to our hearts: the latest property market trends and the headline-grabbing statistic that 27% of all property sales in August were to first-home buyers—the highest of any buyer group.

For the first time in decades, first-home buyers have overtaken movers (those selling and buying), and we dove deep into the reasons why this shift is happening, how long it could last, and what it means for interest rates, house prices, and market dynamics.

Here’s a rundown of the key takeaways:

Watch the full video here

1. Bank Test Rates Are Dropping

Lower test rates signal that borrowing costs are set to decrease, making mortgages more affordable for buyers and increasing their borrow capacity. This is great news for first-home buyers eager to get into the market with more favourable lending conditions.

2. LVR Changes and More Money in the Market

Changes in Loan-to-Value Ratio (LVR) policies has put more money into the hands of borrowers. For instance, investors only need 30%. Plus, first-home buyers with less than a 20% deposit can now use boarder income—an extra boost that wasn’t available before!

3. Market Sentiment is Shifting

Confidence is gradually returning to the market. Lower interest rates are injecting optimism, but buyers are taking their time because they have more options. With plenty of properties on the market, buyers feel less urgency, and sellers are still adjusting to the “new normal” of property prices.

4. What’s Happening with Investors?

Investors are re-emerging after a slew of regulatory changes—from the Healthy Homes Standards to the removal of interest deductibility. While these measures slowed the market, recent interest rates reductions and more on the horizon have sparked renewed interest among investors. With the numbers improving, they’re watching closely, waiting for the right moment to re-enter.

5. Movers Are Slower to Act

Unlike first-home buyers, movers are less active right now. Sellers and buyers are often out of sync on property values, leading to slower transactions. Until sellers adjust their expectations, we’re seeing properties sit on the market longer – but this does change quickly as the market gets more confidence.

6. Interest Rates: A Turning Point

August marked a turning point with the Reserve Bank’s decision to cut the Official Cash Rate (OCR), signalling the beginning of a downward trend in rates. Over the next few months, we expect further cuts, potentially reducing the OCR further down 1.25 basis points by February. Inflation figures are announced on the 17th October which could likely confirm we’ve got inflation back under control, and the OCR could move toward a more neutral position of around 3.75%.

7. House Prices: A Flat Market… for Now

The latest CoreLogic data shows house prices are 17% below their peak, but there’s been a slight 0.7% uptick in the past year. The market may be flat right now, but we anticipate a steady rise in prices over the next 12 months, with growth in the 5%-10% range.

8. The Big Picture: What’s Next?

As interest rates drop, confidence grows. ANZ’s most recent business confidence survey showed the largest jump in confidence in a decade, with a spike in residential and commercial construction and positive employment outlooks. These are the behind-the-scenes changes that signal the market is gearing up to shift into the next cycle.

On average, households currently spend 49% of their income on mortgage repayments. As rates fall, people will have more disposable income, creating a ripple effect throughout the economy.

Our Advice to First-Home Buyers?

Now’s your moment! Take advantage of reduced competition in the market and falling bank test rates. These conditions may only last another six months, so if you’re a first-home buyer, don’t be shy.