First home buyers are being “blindsided” when trying to buy in the electorate of Kooyong, says independent buyer’s advocate Cate Bakos.
Bakos, 2013 REIV Buyer’s Agent of the Year, says first home buyers are struggling because of the large percentage of investment properties in the electorate, exorbitant house prices and misleading information from agents.
“I’m finding that they’re not able to easily buy a property at auction or buy from a private seller because they’ll be knocked out by others,” she says.
Kooyong taxpayers are getting the most benefit from negative gearing net rental loss of any Victorian electorate, and the third largest in Australia, an Australia Institute report released last year revealed.
The median house price in Hawthorn, in central Kooyong, is $2,340,500, up by 26.1 per cent in the year ended March 31, according to the Real Estate Institute of Victoria (REIV). REIV spokesman Paul Bird says prices in the Kooyong area are only going to get higher.
Prices rose by between 13.6 per cent in Kew, to 23.1 per cent in Canterbury and 23.3 per cent in Kew East in those 12 months, he said.
“Suburbs like Kooyong are likely to see continued price growth over the year, however, at a more gradual rate given a moderating market at the present time,” he said.
“Camberwell, Hawthorn, Kew and Canterbury are perennially popular suburbs in Kooyong – in a sense, “aspirational”, with many Melbourne buyers looking to access these locations for all their impressive amenities and high-quality lifestyle,” Bird said.
David Johnston, managing director of Property Planning Australia, agreed, saying, “it’s a highly sought after area that’s tightly held. It’s a reasonable place to invest.”
While the Coalition has pledged not to change negative gearing rules, Labor says its policy of restricting negative gearing tax breaks to new properties will free up properties and allow new home buyers to more easily enter the market.
Johnston disagrees saying: “In a suburban area like Kooyong there is a higher level of established property. The Labor plan is not clear about what and how they would change it, what the cut-off date would be and if future purchases will be effected. It’s a concern.”
James Cochr, a recent first home buyer, lives in Toorak with his doctor girlfriend. He says they had no problems getting a bank loan and were open to a move to Hawthorn, but found it “too expensive for them to justify buying”.
“Kooyong probably would’ve been a bit expensive unless we’d gotten family help, which we didn’t particularly want to do. In the end we settled to live in Box Hill and we’re happy but it didn’t look easy no matter how we looked at it to get into Kooyong,” he says.
Bakos says the Kooyong area is perfect for the people who want to live there – 20 to 30-year-old young professionals looking to start a family – but instead the median residents are older singles or partners in large, relatively empty houses.
“They (young professionals) are blown away when they get to a property thinking they have more than enough to make a deal to only find they’re a long way off the mark. It is something that needs to be sorted out.”
Amber Williams and her husband Peter, who live in Croydon, saved a home deposit of $70,000 and were approved for a loan of $500,000 from ING. Despite the amount they could offer, they were unsuccessful with their three bids, with the properties selling for $100,000 – $200,000 more than their real estate agent had expected.
“The main priority for us is the land size but then of course we’re competing with investors who want to chuck a sneaky unit in the backyard,” Williams said.