The Shape of Things to Come

24 January 2014

Increasingly smaller blocks, creative building designs and changes to lending criteria and credit reporting will see the first homebuyer market evolve this year

COMPACT lots, clever housing designs offering lifestyle perks such as generous entertaining areas and master suites, and architecturally exciting features using low-maintenance building materials will be hotly sought after among first homebuyers this year.

When gazing into their crystal balls for 2014, housing industry and finance experts point to evolving creativity in compact housing design, as well as innovation among lenders to help first-time buyers finance their homes.

With a First Home Owner Grant offering $10,000 for new homes, as opposed to $3,000 for established homes, it’s likely new homes will be in greater demand among first-time buyers this year, say experts.

Satterley Property Group chief executive Nigel Satterley says smaller lots between 225sq m and 350sq m will be in high demand as well as housing designs that include an alfresco area instead of high-maintenance gardens and lawns.

Nigel says that living spaces will be open plan with entertaining areas rather than formal lounges.

Instead of having a lot of small unused bedrooms, first homebuyers will opt for fewer rooms but enjoy large master suites. 

“These changes can make a difference to how people live and slash tens of thousands of dollars from building a new home,” he says. 

In 1999 all of the homesites the Satterley group developed and sold were 630sq m or bigger, whereas sites of this size are only bought by 4 per cent of first-time buyers today.

Nigel says compact sites of 350sqm or less are more affordable, cheaper to maintain and more appropriate for a busy lifestyle.

Plus, the lowest interest rates in 50 years, the $10,000 First Home Owner Grant and the opportunity to build a home for less each week than Perth’s median rent of $470 means it’s a great time to become a homeowner. 

Nigel says that property hot spots include master-planned communities in Butler, Honeywood at Wandi, Heron Park at Harrisdale, and Austin Lakes on the Peel Inlet, just 12 minutes drive from Mandurah.

Planned estates, which attract schools, colleges, transport, shops and recreational amenities, will always be a better investment.

With children born in the 1980s driving the first homebuyer market, Baltinas Made property group’s Barry Baltinas says that 2014 will see an increased focus on architecturally exciting homes with higher levels of convenience and lifestyle perks.

Barry, an architect, believes that savvy, educated, socially connected and style-conscious first homebuyers will drive demand for edgy inner-city apartment complexes.

He says there is also a rising emphasis among these buyers to ensure their first homes represent an astute investment, so this will also put extra pressure on builders and developers to supply stylish, future-focused homes.

Barry says features such as landscaped balconies with vertical gardens, rainwater harvesting tanks and solar panels will be in demand.

When it comes to obtaining a mortgage, finance experts say 2014 will bring greater competition among lenders, more innovation in finance packages and a greater reliance on parental assistance.

MPM Finance Director Paul Moran says given the possibility of interest rates rises towards the end of the year it’s likely more first homebuyers will use fixed-rate finance.

The Mortgage Gallery’s Glen Paap says the willingness of some lenders in 2013 to accept a 3 per cent deposit from borrowers – instead of 5 per cent – is likely to end in 2014. 

The North Beach broker says some institutions may have offered these loans to increase their loan book, but this type of client will now be seen as too risky.

Rather than being able to secure a loan with an extremely small deposit, more borrowers will be accessing family guarantees.

Resolve Finance managing director Don Crellin says parental assistance may take the form of a deposit gift, going guarantor by offering their own home as security, or a joint purchase of their child’s first property.

Don says lenders are likely to become more flexible and innovative to facilitate parental assistance and will create products, such as Bluebay’s Smart Families Home Loan.

“All parties must understand the obligations and risks involved, therefore home loans that formalise the arrangement are likely to become increasingly popular,” he say.

Don says first homebuyers can look forward to assistance with goal setting to save a deposit through initiatives such as My Home Plan from Bluebay Home Loans.

These initiatives offer homebuyers a mentor and personalised plan, which includes the ability to update and track progress with secure online software.

Don says a homebuyer’s credit history will become even more important in 2014 as changes to credit reporting take effect.

Previously, credit reports have been limited to credit inquiries and negative data such as defaults or judgments.

But from this year credit reports will contain additional information, such as the dates that credit accounts were opened and closed, details of credit limits and up to 24 months of repayment history.

“If a person applying for a home loan pays their bills on time, nothing much changes,” Don says.

“If they have had a small default in the past, the additional information will allow them to demonstrate they have rectified the issue by showing a period of payments made on time.”

Left arrow

Return to Media