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Buying a home in the ACT made easier for some

By Alexandra Craig - 2 June 2015 91

house-stock-roof

Housing affordability is a hot topic at the moment. Yesterday it was reported that out of all the capital cities in Australia, Canberra experienced the biggest jump in home values in May.

I’m currently looking to buy my first home, and it’s not an easy task. I’ve experienced a lot of competitiveness both at open homes and even before an open home has taken place. I’ve seen sale listings go up online in the morning, with the open home listed for later in the week, and by the afternoon the property is already under offer.

I’m not sure whether this is entirely legal, but I’ve seen it happen on several occasions in the last 12 months. I’ve even arrived at an open home and the agent has told me the property has already been sold (which hasn’t been specified online), but that they’re still allowing people in to look around.

The majority of homes on the market are listed for auction which makes me a bit uneasy – my own inexperience, nerves, and pressure wouldn’t bode well at an auction for a house I really want. Generally I don’t even look at auction listings.

I recently decided to stop telling real estate agents I’m a first home buyer, as I found that this made them more likely to not return my calls and emails. I want to buy in an established suburb, which disqualifies me for the first home owner grant, unless of course I manage to find a vacant block of land and build on it, so I think agents were just assuming that without the grant I wouldn’t be able to buy anything in the areas I wanted and that answering my queries would be a waste of their time.

I see plenty of homes in established suburbs that I can afford without the grant (though the grant would make things easier). However, I never get the chance to put an offer in as it’s always snapped up before I even get to inspect the whole house. Of course, it would be much easier for me to buy in a new suburb off the plan, but I don’t want to do this. Call me crazy, but I don’t like the idea of committing to buying a house in a suburb that doesn’t exist yet, or is half finished. I like to know exactly what I’m getting into.

The ACT Budget will be handed down this afternoon and many first home buyers have their fingers crossed that the first home owner grant will be reverted to all homes in all suburbs. Given this change was implemented two years ago, I’m not holding my breath for things to go back to how they were.

It’s not all bad news though, with pre-Budget announcements showing that stamp duty will be reduced further with the buyer of a $300,000 home saving about $2900, the buyer of a $500,000 home saving $5900, and the buyer of a $750,000 home saving $7775.

In addition to this, first home buyers, eligible pensioners and people over 60 years of age will qualify for the concessional stamp duty rate of just $20.00.

While the stamp duty reductions aren’t exorbitant, I’m sure most will welcome the news. As for the concession stamp duty rate of $20.00, it’s hard to complain about that.

When did you buy your first home in Canberra? Or are you currently in the market for a new home?

What’s Your opinion?


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91 Responses to
Buying a home in the ACT made easier for some
Holden Caulfield 2:56 pm 02 Jun 15

Southmouth said :

BerraCitizen said :

I don’t understand why people are so afraid of auctions. It’s simple. Set a limit and bid up to that point and stop when your limit is reached. If you bid over your limit then that is your lack of discipline. Obviously it helps to do your homework to know what the house is worth. The excellent thing about an auction is that the the bidding process is more transparent unlike when you have scammer real estate agent call you and say “just checking what your final offer is, as we’ve had some other offers come in”.

I tried to buy a house at auction about 3 years ago. Agent told me the target price was low to mid 9s. I got my ducks lined up for mid to high 9s and the place was passed in at 1.1. Thats why people don’t like auctions.

If you keep an eye on the market for any length of time, check out recent sales etc, it’s very easy to come up with a reasonably accurate estimation of a property’s sale price.

It’s worth doing this regardless of what the agent says so that you are educated to know what’s a reasonable price for the area and type of property you are buying. I’m surprised that people don’t seem to have the initiative to do their own research, you’re not buying a pair of jeans on sale!

Then, if you are buying at auction, you know that anything over the reasonable sale price you have armed yourself with is just money down the drain to win the game!

And if you have the cash to win at all costs, more power to you. 🙂

Holden Caulfield 2:50 pm 02 Jun 15

If it’s any consolation the apartment complex I live in (I’m on the first floor) is in an older suburb, is new and appears to be very well built.

I’ve been in for a couple of years now and would be lucky to turn on the reverse cycle a/c more than 20 times in a year. It is surprisingly well insulated from weather and sound. Especially for sound, I’m next to the lift and you can’t hear it operating. Sometimes the chime of the bell can be heard because of its pitch, but that’s all.

So, there are some building companies that do things properly. FWIW, the complex was built by Morris Property Group.

vintage123 2:48 pm 02 Jun 15

Whilst I am a fan of a visible purchase price, I am also not against transparent auctions. What I don’t like are those silent auctions which a few agents in canberra are using. I have heard horror stories from would be buyers who have seen an ad in all homes with a price and + next to it, only to find out that it’s a silent auction and you have one chance in thirty days to submit your highest offer. Friends of mine, along with the other first week 7000 views on all homes were sucked into a place in nicholls recently that was advertised for 440k+, which appeared way too cheap. I believe they put in an offer of 640k only to not win it. That’s why people don’t like auctions. Especially silent ones, as it is wasting everyone’s time.

VYBerlinaV8_is_back 2:37 pm 02 Jun 15

Southmouth said :

BerraCitizen said :

I don’t understand why people are so afraid of auctions. It’s simple. Set a limit and bid up to that point and stop when your limit is reached. If you bid over your limit then that is your lack of discipline. Obviously it helps to do your homework to know what the house is worth. The excellent thing about an auction is that the the bidding process is more transparent unlike when you have scammer real estate agent call you and say “just checking what your final offer is, as we’ve had some other offers come in”.

I tried to buy a house at auction about 3 years ago. Agent told me the target price was low to mid 9s. I got my ducks lined up for mid to high 9s and the place was passed in at 1.1. Thats why people don’t like auctions.

Underquoting is one of reasons real estate agents have the reputation they do.

Southmouth 2:23 pm 02 Jun 15

BerraCitizen said :

I don’t understand why people are so afraid of auctions. It’s simple. Set a limit and bid up to that point and stop when your limit is reached. If you bid over your limit then that is your lack of discipline. Obviously it helps to do your homework to know what the house is worth. The excellent thing about an auction is that the the bidding process is more transparent unlike when you have scammer real estate agent call you and say “just checking what your final offer is, as we’ve had some other offers come in”.

I tried to buy a house at auction about 3 years ago. Agent told me the target price was low to mid 9s. I got my ducks lined up for mid to high 9s and the place was passed in at 1.1. Thats why people don’t like auctions.

BerraCitizen 1:54 pm 02 Jun 15

I don’t understand why people are so afraid of auctions. It’s simple. Set a limit and bid up to that point and stop when your limit is reached. If you bid over your limit then that is your lack of discipline. Obviously it helps to do your homework to know what the house is worth. The excellent thing about an auction is that the the bidding process is more transparent unlike when you have scammer real estate agent call you and say “just checking what your final offer is, as we’ve had some other offers come in”.

madelini 1:06 pm 02 Jun 15

It is legal for agents to keep advertisements up if the owner has accepted an offer on a property – if the open home is scheduled for Thursday, but an offer is only accepted on the Wednesday afternoon, no one is really locked in. The other thing is that you can make a competing offer and the Seller can choose whether or not to accept it – if the contract is already issued, in the interest of full disclosure, the first Buyer must be given the opportunity to either up their offer or pull out.

It’s just a tight market currently. The best thing to do is to get to know a few agents and make sure that you’re on the list for new properties as they are listed. Also, you can put in pre-auction offers for properties due to go under the hammer, as long as you’re willing to waive the cooling off period (which is standard practice anyway) and exchange relatively quickly after receiving the contract and reviewing it with your solicitor.

frg1978 12:48 pm 02 Jun 15

Mysteryman said :

Paul Costigan said :

Two Comments: First I agree about the snapping up of houses in established suburbs. Last year two houses in our immediate area were listed for auction but did not go to auction as they were sold within a week. So I agree – ‘some’ are benefiting – but it is super difficult for the rest.

The other comment relates to quality of the build of new apartments. We have been watching two lots of townhouses being built nearby and the have observed how basic the building quality is. Absolute minimum insulation (almost none), no double glazing and almost no sound proofing between floors and joining walls. The owners/tenants will have high energy bills and will share their lives with their neighbours. I suspect there will be no solar and absolute minimum allowances for greenery (shading).

These deficiencies were the standards when our house was built in the 1960s, but to see this in 2015 does not say much for the ACT’s building requirements. The standard of the build has not changed in decades. So to anyone looking to buy new in established suburbs – you still need to look beyond the gloss and check out the things such as insulation etc as those energy bills are going to get even higher.

PS: I have not commented on the standard of build in new suburbs – that may be another article another time.

You’re absolutely right about the build quality. It’s happening in house and apartments in newer and older suburbs. I’ve been looking at new places and there’s no way I’d pay the money they are asking for a house/apartment with almost no insulation, no double glazing, crappy venetian or vertical blinds, and often no heating/cooling. Most new blocks are tiny and result in house being right up against each other, which makes for all sorts of sound issues.

I don’t believe many of these places actually meet the star ratings they are being given.

This is exactly the case in the new section of Watson where we have purchased a small house and it is my belief that these suburbs will become slums over time due to the poor quality of the building. Everything appears to have been done as cheaply as possible and the developers would not allow any modifications to the plans such as additional insulation etc. There is no ventilation in the roof cavity to allow heat to escape in summer so long after the sun has gone down and the temperature has dropped 10 or more degrees, the heat inside is unbearable with no possibility of cross ventilation due to a lack of windows. And adding these things post-construction can be either very expensive or not possible at all. I really do not know how they achieved the stated EER of 6. On top of this values have dropped significantly in the area, and the houses that are for sale are not moving anyway. Its a learning curve and you make the most of what you have but it is frustrating that the government allows these kinds of developments which do target the entry level buyer.

VYBerlinaV8_is_back 12:25 pm 02 Jun 15

Giving out grants does nothing more than increase purchasing power for those trying to get into a supply constrained market.

I also agree with the commenters regarding poor building standards. Not only are a lot of new Canberra properties under-specced, but also poorly assembled. I own a bunch of Canberra properties, and based on my experience would NEVER touch a brand new build, or even anything up to 10 years old.

vintage123 11:59 am 02 Jun 15

It is difficult to provide any useful advice without knowing a little more detail on what it is you are seeking to achieve. Are you purchasing to live in or for investment. Are you looking at a maximum lending high risk purchase scenario or are you halving it with a dual income partner. What’s your borrowing capacity and repayment schedule.

Having 20 years experience in this space I can give you some free advice if you can provide a little more detail.

Cheers vintage 123

dungfungus 11:53 am 02 Jun 15

Paul Costigan said :

Two Comments: First I agree about the snapping up of houses in established suburbs. Last year two houses in our immediate area were listed for auction but did not go to auction as they were sold within a week. So I agree – ‘some’ are benefiting – but it is super difficult for the rest.

The other comment relates to quality of the build of new apartments. We have been watching two lots of townhouses being built nearby and the have observed how basic the building quality is. Absolute minimum insulation (almost none), no double glazing and almost no sound proofing between floors and joining walls. The owners/tenants will have high energy bills and will share their lives with their neighbours. I suspect there will be no solar and absolute minimum allowances for greenery (shading).

These deficiencies were the standards when our house was built in the 1960s, but to see this in 2015 does not say much for the ACT’s building requirements. The standard of the build has not changed in decades. So to anyone looking to buy new in established suburbs – you still need to look beyond the gloss and check out the things such as insulation etc as those energy bills are going to get even higher.

PS: I have not commented on the standard of build in new suburbs – that may be another article another time.

Excellent comments Paul.
Many of us are always saying how can this happen in a place like Canberra, especially with frosts like we are having this week?
PS Keep a low profile if you are travelling to the burbs.

Mysteryman 11:48 am 02 Jun 15

Paul Costigan said :

Two Comments: First I agree about the snapping up of houses in established suburbs. Last year two houses in our immediate area were listed for auction but did not go to auction as they were sold within a week. So I agree – ‘some’ are benefiting – but it is super difficult for the rest.

The other comment relates to quality of the build of new apartments. We have been watching two lots of townhouses being built nearby and the have observed how basic the building quality is. Absolute minimum insulation (almost none), no double glazing and almost no sound proofing between floors and joining walls. The owners/tenants will have high energy bills and will share their lives with their neighbours. I suspect there will be no solar and absolute minimum allowances for greenery (shading).

These deficiencies were the standards when our house was built in the 1960s, but to see this in 2015 does not say much for the ACT’s building requirements. The standard of the build has not changed in decades. So to anyone looking to buy new in established suburbs – you still need to look beyond the gloss and check out the things such as insulation etc as those energy bills are going to get even higher.

PS: I have not commented on the standard of build in new suburbs – that may be another article another time.

You’re absolutely right about the build quality. It’s happening in house and apartments in newer and older suburbs. I’ve been looking at new places and there’s no way I’d pay the money they are asking for a house/apartment with almost no insulation, no double glazing, crappy venetian or vertical blinds, and often no heating/cooling. Most new blocks are tiny and result in house being right up against each other, which makes for all sorts of sound issues.

I don’t believe many of these places actually meet the star ratings they are being given.

Mysteryman 11:33 am 02 Jun 15

It’s probably worth mentioning that the stamp duty reductions are coming at the cost of rapidly rising rates. Ten percent, year on year for the next few years at least, on top of the 10% increases we’ve already seen.

That saving of about $5900 for a $500,000 home will be negated and paid for many, many times over thanks to the rates increases.

Paul Costigan 11:09 am 02 Jun 15

Two Comments: First I agree about the snapping up of houses in established suburbs. Last year two houses in our immediate area were listed for auction but did not go to auction as they were sold within a week. So I agree – ‘some’ are benefiting – but it is super difficult for the rest.

The other comment relates to quality of the build of new apartments. We have been watching two lots of townhouses being built nearby and the have observed how basic the building quality is. Absolute minimum insulation (almost none), no double glazing and almost no sound proofing between floors and joining walls. The owners/tenants will have high energy bills and will share their lives with their neighbours. I suspect there will be no solar and absolute minimum allowances for greenery (shading).

These deficiencies were the standards when our house was built in the 1960s, but to see this in 2015 does not say much for the ACT’s building requirements. The standard of the build has not changed in decades. So to anyone looking to buy new in established suburbs – you still need to look beyond the gloss and check out the things such as insulation etc as those energy bills are going to get even higher.

PS: I have not commented on the standard of build in new suburbs – that may be another article another time.

Ezy 10:25 am 02 Jun 15

Canberra has had a jump in home values due to the number of buyers injected into the market by the whole Mr. Fluffy saga. These buyers are cashed up, and receive a waiver on stamp duty which gives them the opportunity to have an ace up their sleeve when it comes to purchasing property in the ACT. This has created a little mini housing boom in Canberra which, unfortunately, is not good news for us normal buyers.

I am currently in the LONG process of trying to find a home, but also I have recently helped my mum buy a home. First up, my mum – I would put her in the entry level townhouse market. Not a lot of options out there but we eventually found a beautiful place for her after we lost out at an auction a few weeks ago. We bought her house via an offers above, rather than the ever popular auction process. Still, it was competitive at this end and the offers above scenario isn’t as transparent as an auction process.

Now my experience, I have been looking for a house for around 6 months. In that time I have sold my first home (via offers above) which went extremely well as it sold within 4 days of being on the market and fetched a higher price than I was expecting. In the 6 months of looking for property, I have looked at over 100 houses. Of which I have registered, bid and lost at 2 auctions, and lost another one at an offers above scenario – and yes, all of these were lost to Mr Fluffy buyers.

I am not sure how much longer it will take to find the house – I am patient, and believe the right home will come along eventually, but I do know that I will be paying more than the market value. There are no bargains to be had out there at the moment – thats for sure.

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