First home buyers are making their way back to the property market

Falling interest rates, subdued house prices and relaxed lending rules has made now the perfect time for first home buyers — and experts say there are ways to get into the market.

Falling interest rates, subdued house prices and an easing of lending rules have given first home buyers a new opportunity to crack into the market.

The latest CoreLogic data shows the proportion of first home buyers signing up to owner occupier loans reached 28.5 per cent in May — the highest proportion since 2012.

This is from a recent low of 19.5 per cent in 2015.

Aussie Home Loans chief executive officer James Symond said first home buyers who had been diligently saving should understand what price range they could afford before they went on the hunt for a home.

“This can be done by searching areas where you want to buy and the prices being paid for apartments and homes,” he said.

“The best rule of thumb is that you can usually borrow about three times your gross annual salary, on top of the deposit you arrange through savings.”

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Mr Symond said first home buyers were “on the move again”, spurred on by falling property prices and various government incentive schemes.

Janna Brown-Greaves, 30, and her husband Matt, recently purchased a two bedroom, one-and a-half bathroom semi-detached home in inner-city Melbourne.

Janna Brown-Greaves, 30, and her husband, Matt, 32, recently purchased a two bedroom semi-detached home in Prahran in Melbourne. Picture: Ian Currie

The pair spent more than a year furiously saving, which involved moving back in with Mrs Brown-Greaves’ parents to cut back on their expenses.

“We were cooking more at home, we stopped buying lunches at work every day and I was using the coffee machine at work,” she said.

“We didn’t have to pay rent and had no utilities to pay. We were very lucky.”

They put up a deposit of about 12 per cent and Mr Brown-Greaves’s father also gave them a small loan to help them get their feet on the property ladder.

They signed up to a mortgage with Westpac and opted for a split loan, fixing half for three years at 3.69 per cent and leaving the rest variable at a rate that is now 3.68 per cent.

ME Bank spokesman Matthew Read said house price falls in cities including Sydney and Melbourne was a good thing for first home buyers but it was still expensive to break into the market.

“We have seen a 10 to 15 per cent fall in property prices in these cities in the last few years but they had almost doubled in price in the previous decade,” he said.

“Start saving a deposit as early as possible because it’s important you get into a savings habit.

“It’s such a long journey and you have to hold discipline over a long period. You have to learn the skills and track your savings.”

@sophieelsworth