Fearless First Home Buyers Unfazed by COVID

Buyers, Sellers,  Buyers and sellers

Buying property is a highly competitive business but it seems more so during a pandemic. Owners are reluctant to sell, but first home buyers refuse to shy away from the market despite COVID doomsayers. 

It’ll take more than a pandemic to scare Queensland’s first home buyers (FHBs) away from the property market. Despite a 31% drop in new listings over March and April, first home buyer loan commitments in April numbered only slightly less than January’s – 1,501 down from 1,657. Additionally, new mortgage activity was up 10% year-to-date to the week ending 28th June according to the latest Early Market Indicators report. Without experience in buying and selling properties, you’d expect first time purchasers to shy away when uncertainty hits the market. So why are FHBs so confident when the “experts” are predicting property doomsday?

“We just aren’t seeing the impact of COVID,” says first home buyer Josh Harrison. Harrison and his fiancé Teresa Clausen have been looking to buy since January, and the pandemic hasn’t dampened their ambitions. “We wondered whether there’d be mass unemployment and whatever else people were predicting, but none of it changed our position,” he adds. “We were looking regardless.”

The frustrating part, according to Harrison, is that sellers are the ones who’ve gotten cold feet. Buyers are out in force but they’re all competing over slim pickings. Meanwhile, it seems sellers are instead waiting to see what happens. “The open homes we’ve been to all suggest similar things. There’s an absolutely enormous amount of buyers ready to go, but there’s real apprehension on behalf of sellers,” explains Harrison. Moreover, a lot of those buyers are searching for their first home. “By what we see at open homes, there’d be quite a few first home buyers – probably around 60-70%,” Harrison estimates.

Incentive for first home buyers

In January, the National Housing Finances and Investment Corporation (NHFIC) launched its First Home Loan Deposit Scheme (FHLDS). Designed to help first home buyers purchase sooner, the scheme lets them buy a home with just a 5% deposit. Since the NHFIC covers another 15%, borrowers won’t need to pay for the usual lender’s mortgage insurance (LMI). The drawback is that only 10,000 places in the scheme were up for grabs, and they flew off the proverbial shelf. Another 10,000 places were made available on July 1, but they too didn’t last a day or two.

First home buyer's new property, with sold sign and pet dog
PICTURED: Nguyen and Buxton’s dog Nellie proudly sitting in front of her new home.

First home buyers Van Nguyen and her husband Zach Buxton recently purchased an apartment in Windsor. They were among those fortunate enough to secure a place in the loan scheme. “It was our main reason for purchasing and being able to get our foot in the door,” explains Nguyen. “There’s no way we could’ve saved the 10-20% to buy right now – we would’ve had to save for another 3-4 months.” The pandemic turned out to be an opportunity in disguise. Their original plan was to spend their savings on a year-long backpacking holiday. With that out of the equation, purchasing a home became the obvious choice.

“Our goal was to have the money to go travelling the world for a year, and then COVID hit,” explains Nguyen. “It became clear we wouldn’t be able to travel freely and do all the backpacking we wanted to do.” The couple assessed their options and found that thanks to the loan scheme, they’d be able to step onto the property ladder right away. Their modest repayments even allow them to keep saving for the dream vacation. “We wanted to buy a unit so we could still save for our holiday while paying our mortgage,” adds Nguyen. “It worked out that our repayments are the same, if not less than what we’re already paying in rent.”

COVID not a concern for FHBs

As for coronavirus fears, Nguyen says she and her husband overcame the doom and gloom by doing their own research. “We agonised over buying now or waiting, and we had a lot of people – particularly my parents – telling us to wait,” she tells. “But I read a lot of articles from real estate agents and investors, and they were telling a different story. They said there’d be drops here or there, but that doesn’t mean it’ll drop in the Brisbane market near the CBD.” Which is just where they bought, a few kilometres from the city.

Just as Harrison and his fiancé did, Nguyen and Buxton found themselves looking through a market of “slim pickings”. “There were a few properties that were good, but otherwise it was harder to find stuff,” further explains Nguyen. So despite the predictions of a property apocalypse, buyers – and particularly first home buyers – aren’t fazed. Instead, they’re coming out in force thanks to finance schemes, favourable lending rates and quiet confidence. So, the question really is, where are all the sellers?