Could budget changes give first home buyers the upper hand?

First home buyers may have more room to negotiate if the proposed Federal Budget changes reduce competition from property investors.

The Australian Financial Review reports that some analysts expect house prices in Sydney and Melbourne could fall by up to 9% this year, while Treasury modelling suggests the reforms would slow price growth rather than trigger widespread price declines.

History suggests any downturn may be temporary. According to Cotality analysis, Australia has experienced 10 housing downturns over the past 40 years. In each case, prices fell for at least three months, with downturns lasting an average of 10.8 months before stabilising and moving higher again.

Cotality head of research Gerard Burg said interest rates may ultimately have a bigger influence first home buyers than housing policy. While higher rates can reduce borrowing capacity, he noted that Sydney property and other housing markets have historically moved through cycles, with long-term outcomes often proving more important than short-term market movements.

About the author – Alex Veljancevski is a Sydney Mortgage Broker with Eventus Financial, which assists first home buyers, investors, upgraders and borrowers seeking to refinance to a better deal on their home loan.