Why you shouldn't jump into a cheap area despite new incentives for first-home buyers - as one expert says it's better to RENT instead
Young Australians are being warned to avoid snapping up property in cheap suburbs as first-home buyer incentives are extended.
This month's Budget offered a new round of the First Home Loan Deposit Scheme where property newcomers only need to stump up a five per cent deposit as taxpayers underwrite the rest of the 20 per cent deposit.
Metropole Property Strategists director Michael Yardney said prospective first-home buyers looking to buy an investment property needed to be wary of poorer suburbs - even if they offered higher rental yields.
'Cheap properties that command relatively high rents might sound enticing, but these tend to be located in poor capital growth suburbs or in lower socio-economic areas and you should be wary of the potential pitfalls,' he said.
'You're more likely to attract tenants on low incomes who might struggle to pay rent, and crime and anti-social behaviour is often higher in these suburbs.
'Leave the slums to the slum lords.'
Mount Druitt in Sydney's western suburbs has a median house price of $580,576 - a level well below greater Sydney's $983,262, CoreLogic data for September showed.
CoreLogic 9月份的数据显示，悉尼西郊的德鲁伊特山(Mount Druitt)的房价中值为580,576美元，远低于大悉尼的983,262美元。
Digital Finance Analytics principal Martin North, a financial analyst, said renting offered better flexibility during uncertain economic times.
数字金融分析公司(Digital Finance Analytics)负责人、金融分析师马丁·诺斯(Martin North)表示，在不确定的经济时期，租赁提供了更好的灵活性。
'In the current market, paying rent and remaining flexible, even as rents fall, may make more sense especially if home prices are due to slide,' he said.
Ahead of the October 6 Budget, the government announced an additional 10,000 places would be provided until June 2021, but this time for those who bought a new home or a newly built home.
Assistant Treasurer Michael Sukkar said this would 'drive more construction and support jobs as part of our Economic Recovery Plan'.
Mr North said this had more to do with stimulating building jobs than helping first-home buyers.
'This is a bribe to help the construction sector and first-home buyers are effectively the cannon fodder so buyer should beware,' he said.
The coronavirus recession has hit Sydney and Melbourne the hardest, causing both rents and home prices to fall.
Sydney's median rent for houses and apartments dived by 8.9 per cent in September 2020, compared with a year earlier, SQM Research data showed.
Australia's biggest city is no longer the most expensive for tenants, with Canberra now having that title.
Sydney's median house price fell in September for the fifth consecutive month while in Melbourne it has dropped for six straight months, CoreLogic data showed.
For those worried about house price falls, renting may be the solution.
Mr North rated a 30 per cent fall in Australian house prices as a 42.5 per cent chance and a 45 per cent drop as a 25 per cent chance.
Mr Yardney said middle-income suburbs that had more families were a better investment.
'It means that people with higher paying jobs can afford to buy new homes or upgrade their home and areas where wages growth is higher than average experience capital growth that is higher than average,' he said.
Despite the coronavirus recession, Australians don't appear to be worried about property with a Westpac-Melbourne Institute survey of 1,200 people in October showing consumers were keener on buying a home now than they were before the COVID-19 pandemic.