Broking franchise MoneyQuest has cautioned first home buyers against postponing the purchase of property based on “unfounded predictions” that house prices are about to drop.
According to MoneyQuest managing director Michael Russell, first home buyers are mistaken in thinking it's wise to delay entering the housing market in the hope that prices will soon fall.
“In the past couple of weeks, a number of so-called property experts sat around a crystal ball, yet again claiming the imminent arrival of a housing price fall,” Mr Russell said.
“This has been a familiar pattern since 2008, whereby academics continue to predict corrections – anywhere from 10 per cent to complete Armageddon.
“But in reality, Australia has seen consistent year-on-year growth since 2012 with a little over 5.0 per cent growth in the past decade.”
While Mr Russell acknowledged that some people are “legitimately financially shut out”, he is concerned that many who have the capacity to enter the market are deferring their decision due to “unfounded predictions”.
Mr Russell noted that house prices have risen by an average of 8.1 per cent in the three years to March 2016, with a mean price of $612,100.
This indicates that today’s first home buyers need to save an additional $49,580 a year just to keep pace with the market, he said.
“My recommendation to first home buyers is to see a licensed mortgage broker to discuss their circumstances and determine their borrowing capacity,” Mr Russell said.
“They will then be in a position to make an informed, confident decision and objectively assess whether they can enter the housing market today.”
[Related: Older Aussies face rising mortgage debts]
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