Australia's best financial comparison website RateCity (www.ratecity.com.au) has found that first home buyers face a tougher market than last year, following the release of its RateCity First Home Buyer Index Report* - Autumn 2011.
RateCity's CEO Damian Smith said the change in the RateCity Index was largely affected by the rise in interest rates. On average, mortgage repayments cost around $164 per month more than this time last year. According to the report, it is the first time in 18 months that first home buyers are facing such a level of difficulty.
Despite the historically low level of activity amongst first home buyers, the RateCity report indicated stability in property prices over the last 12 months, with the national average house price sitting at about $491,000 (based on the RP Data-Rismark Hedonic Index using the capital cities data).
In addition to this, Mr Smith suggests that there are other signs in the property market that also indicate a good time to buy a first home.
"Interest rates have been on hold since November 2010, and recent Reserve Bank comments suggest relatively slow rate movements for the rest of 2011," says Mr Smith.
"We believe this is a very good time for potential first home buyers who are confident about their employment prospects and have a solid track record of building savings, and can therefore meet repayments with confidence."
What should first home buyers do?
*RateCity calculates the First Home Buyer Index based on several key factors including:
o Average first home buyer loan size (source: Australian Bureau of Statistics)
o Benchmark basic variable rate (average of the major 4 banks, Source: RateCity)
o Mortgage repayments (Source: RateCity)
o Percentage of income to repayments (Source: ABS, RateCity)