first home buyers
First home buyers are increasingly being prices out of the heated property market. Image – Canva.
  • House prices have risen by 18% over the last 12 months
  • CBA and NAB are the only two major lenders offering all three of the federal government's first home schemes
  • Dr Michael Baumann offers six tips for first home buyers in the heated market

With house prices up by 18% in the past twelve months, increasing numbers of first home buyers are being priced out of the market, despite record low-interest rates.

Last month, Real Estate Institute of New South Wales (REINSW) CEO, Tim McKibbin, even went as far as to say: interest rates are irrelevant given the cost of the property.

After all, if a first home buyer wishes to purchase a median-priced house in Sydney, they will be required to fork out a $280,000 deposit to avoid mortgage lenders insurance.

While first home buyers peaked at 18% of mortgage approvals during the middle of last financial year, this has now declined to 12%, due to affordability constraints.

Commonwealth Bank (CBA) Executive General Manager of Home Buying, Dr Michael Baumann, said the CBA is just one of two major lenders in Australia that offer loans under the Government’s First Home Loan Deposit Scheme, New Home Guarantee and Family Home Guarantee schemes.

The other major lender is National Australia Bank (NAB) along with over 30 other smaller lenders.

“Since new spots were released on 1 July 2021, we have seen strong demand from customers, particularly customers applying for the First Home Loan Deposit Scheme,” he said.

However, given property investors are now back on the scene, first home buyers now face stronger competition.

In light of this, Dr Baumann and CBA have listed six tips for first home buyers.

1. Understand and budget for your upfront costs

In addition to the deposit, other costs that will need to be factored in include stamp duty, bank fees, inspection, agent fees and legal fees.

2. Consider the different sales processes

There are different ways you can buy property, therefore it is important to ask the lender or broker about how you should prepare for a private sale or auction.

3. It’s not just about rate

It is important to spend time understanding the features of the different home loans to see what is a right fit.

4. Conditional approval is just that

Conditional approval can help with confidence when searching and pursuing properties with some confidence, however, it’s only an indication of what the bank may lend to you. The final offer is conditional pending on a number of final checks.

5. Find a solicitor or conveyancer

It is recommended to find an appropriate solicitor or conveyance to assist with the contract and other legal documents.

6. Inspect

Lastly, it is important to make sure you do your due diligence on a property – which includes visiting at different times of the day. Use online viewings and tools to help overcome any COVID-19 restrictions. Be sure to inspect your purchased property prior to settlement.

Currently, private one-on-one inspections are allowed in New South Wales but banned in Victoria, although there is a push to reverse this.


Before making any financial decisions, please do your own independent research, taking into account your own situation. This article does not purport to provide financial or investment advice. See our Terms of Use.

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