Real estate agent Brian Kopp said the market has changed so much in the past couple of years.
“It used to be a really tough market to get into real estate,” he said.
Now, if you want to buy a house, you have to be able to prove your income, show you’re qualified, and have a minimum down payment.
The new standard for new home buyers is “you have to pay more than the market,” Kopp told Real Estate Weekly.
In addition to the new guidelines, Kopp also said you should look for properties with a lower-than-average value, low vacancy rate, and lower-income requirements.
You can check out the full list of the new requirements here.
“There are a lot of properties where you’re not going to get the down payment,” Kapp said.
“But it will be more attractive to a home buyer that has a high down payment.”
So if you’re a young person looking to move to Melbourne, or someone who has recently moved to the suburbs, Kapp suggests looking for properties that have a down payment of under $200,000 and a minimum home equity of at least $50,000.
Kopp’s advice doesn’t stop there.
Kapp also said that new home buying is much more lucrative for young professionals than previous generations.
“People want to move in, and I think that’s why people are willing to make that investment,” he explained.
“Because if you can get that mortgage and you can afford it, it’s the best investment you could make.”
What are the new mortgage guidelines?
The new mortgage rules are more stringent than before.
The government introduced the new rules in 2017.
The guidelines require lenders to offer lower-cost mortgage insurance for mortgages up to $500,000, and to offer mortgage insurance at the time of sale up to 75 per cent.
The rules also require the lenders to provide borrowers with a credit score of no more than 7.5.
The higher the score, the better a borrower can be able afford the loan.
The average loan is now about $250,000 according to the Australian Bureau of Statistics.
In 2017, the median loan amount was about $350,000 per home.
What’s the impact of the changes?
The changes to the rules are expected to have an impact on home buying, according to Andrew Waugh, the managing director of property and investment at Credit Suisse.
“The biggest impact will be on the real estate market because you’re going to see more people who are looking to buy and selling, and they’re going through the market a lot more,” he told Real estate Weekly.
“If you’re buying a property for $250 million, there’s a very high chance that you’ll be selling it within a year or two, because the market is going to be so competitive.”
The government has also announced new rules for lenders, which mean they will now be able offer a $5,000 down payment, and will have to provide at least 10 per cent down payment assistance to first home buyers.
The minimum down payments are now $500 per year, and the minimum mortgage insurance requirement is $200 per month.
The regulations are effective from March 1, 2018.
The changes come as the Australian housing market continues to struggle with affordability and supply.
A recent report from The Australian Financial Review found that a third of Sydney’s housing market was oversupplied, and that prices were still “unsellable”.