The First Home Saver Account depends on you saving all you can and reducing any unnecessary spending. This sets a first time home buyer up with an account where they deposit money into a first home “superannuation-style” saving account that can be used after four years for home deposits. Total annual contributions will have an indexed cap of $10,000.

It is very important to set a budget, so you know how much you spend and reduce your spending wherever possible. You can also choose to deposit a portion of your income into a separate high-interest earning account so that will not be tempted to spend it.

Reducing debt is also very essential. If you have a credit card, you must only spend what you can afford pay to avoid higher interest rates. With an interest rate hike, if you are only just managing repayments increased interest rates may mean who may no longer be able to do so.

When looking for a new home and therefore a new loan you must ensure that what you are looking for is within your budget. Your first home may not be your dream home regardless it is a chance to get into the property market. The decision as to what property is for lifestyle or for capital growth depends on where you look. If you decided that it is for lifestyle, the location of the property is often sacrificed to buy a bigger property.

As a first home buyer you must also be aware of what you are getting into by conducting your own research. Since buying a property is one of the most important decisions that you will make, you must allow yourself enough time to find out more about it to save more money in the purchase. Take on board any home buyers tips and information, the more you know the better equiped you will be to make a decision.

It is important that you buy a property that is within your budget ensuring that you will always be able to pay your mortgage every month and still have money for other necessities such as food, utilities, clothing and transport. Proper calculation is important to help you make the right choice.

A bigger deposit is always better and you will pay less principal if you are paying back early. Determine your mortgage repayments and maintenance costs as well. Properties in outer suburbs are cheaper, though you must consider costs of transport or petrol. Land-house packages hide the loan cost in the property price sometimes and you might be paying more for the home. You can always seek help from an accountant or a lawyer for property issues.

From 1st July 2010, stamp duty will be removed for the next two years for any off the plan purchase up to $600,000.  This will be a saving of up to $22,490 for home buyers.

A 25 per cent stamp duty discount will apply to homes under construction or newly completed worth up to $600,000.  Stamp duty will also be abolished for the next two years for over 65’s who sell their home to move to a newly constructed dwelling worth up to $600,000.

Commenting on this new provision, the Housing Industry Association anointed it as the needed boost for the residential building industry. HIA Executive Director Graham Wolfe said that the stamp duty savings can entice new home buyers such as growing families or investors to seek a property as soon as possible.

NSW Treasurer, Eric Roozendaal said that they have projected a boost of $64 million for the housing construction sector and this made stamp duty rate cuts possible.  The NSW government also announced that they will assist local councils who are experiencing funding shortages by handing them interest-free loans worth $200 million to speed up the process of infrastructure building. Wolfe said that this move is very vital for delays in housing construction can have a negative effect to the NSW’s goal of attracting home buyers.

Meanwhile, Roozendaal said that the Local Infrastructure Fund that is worth $200 million will go to the construction of delayed projects due to lack of funds. Roozendaal added that shovel-ready projects will be prioritized to have them completed as soon as possible. For this fund, local councils can apply for loans for the construction of local roads and the improvement of drainage systems.

Despite rising interest rates, results show that auction clearance rates continue to surge in Melbourne and Sydney. According to data of the Australian Property Monitors, the clearance rate in Sydney is at 71.2 percent on 359 listed houses. This is a 1.4 percent increase from the clearance rate during the weekend before Easter. 

Meanwhile, the clearance rate in Melbourne slightly dropped to 77.9 percent on 495 listed houses from its previous rate of 78.4 percent during the Easter weekend. During this period, a $2.4 million, four-bedroom house in Hawthorn proved to be the most expensive property that was sold during the auctions on the said dates. 

On the other hand, the top property that was sold in the Sydney auctions is a $4.6 million, four-bedroom property in South Coogee. This strong showing at the auction houses continued despite the increase of the official cash rate by the Reserve Bank of Australia from 4 to 4.25 percent. 

Australian Property Monitors head Yvonne Chan said that the increase in interest rates registered minimal to zero effect to auction clearance rates. Chan added that clearance rates will remain strong even if the interest rate reaches 5.25 percent due to the housing shortage. However, she indicated that property prices will once again be on the rise. 

According to property information provider RP Data-Rismark, the average price for a property is a $455,000. Data from the Australian Bureau of Statistics also show that in 2009, prices grew by 14 percent.Despite this rate, Jellis Craig estate agent Scott Patterson said that though April includes school holidays, Easter and Anzac Day, auction offerings have been few but buyer confidence and clearance rate remains high.

Patterson also added that supply and demand forces are at strong play and it has created a market for sellers. He also emphasized that auction listing in May will provide relief for buyers despite the housing shortage. Despite the steady auction clearance rate, home loans dropped by 1.8 percent in February to 50, 287 after a 7.3 percent drop in January. February marks the fifth straight month that registered a decline in home loans.

This massive property in Lake Butler Sound, Orlando, Florida has 13 bedrooms and 23 bathrooms in the making. The property also has a baseball field, a pool that is bigger than most single homes, a spa, a roller skating rink, two tennis courts, a bowling alley and a garage that can fit 20 cars.

It is also reported that two elevators, ten kitchens, a video arcade, two movie theaters and a children’s wing will be added. The mansion also has a grand hall that will greet you upon entering the property. This hall is measured at 120 by 60 square feet and has two sweeping staircases. It also contains a 30-foot stained glass dome that was built for three years.

This property is owned by Westgate Resorts time-share mogul David Siegel and his wife Jacqueline.  They have decided to put the property for sale to keep the finances within the company. The couple drew inspiration to build the property from Versailles during a trip to France.

In Melbourne, the lack of demand for properties saw the auction clearance rate take a nosedive from 74.9 percent last week to 67.2 percent this week. The most expensive property that was sold in Melbourne was a four-bedroom property in Kew that went under the hammer for $3.6 million. The cheapest property that was sold is a three-bedroom house in Cranbourne which was sold for $240,000.

Meanwhile, the most expensive property that was sold in Sydney was a four-bedroom Abbotsford property which was sold for $3.1 million. On the other hand, a two-bedroom unit in Cabramatta was the cheapest property sold at with a rate of $170,000.

Due to these developments, SQM Research Head for Property Louis Christopher said that the latest Reserve Bank of Australia interest rate hikes would bring a drastic impact to first time home buyers. He added that though auction listings are increasing, the demand for these properties is dwindling. He also predicted that property price increase will slow down during the second half of the year.

Almost two-thirds of current tax payers will incur reduction in bill payments for up to $1245. This new legislation will also cost the government $52 million per year over the next four years. Under this new legislation, the increase of the threshold for the land tax-free loan amounts from $110,000 to $300,000 mean that about 74,500 of the 121,000 landowners will no longer feel the financial crunch in 2010-2011.

By July 1, Consumer Affairs Minister Gail Gago will also bring a legislation about having a National Consumer Credit Protection Code.

Adrienne Warren, Senior Economist for Scotia Economics, stated that the steady economic boom and bullish labour market have significant contributions to the increase property prices and sales. The rising Australian economy registered a 17.1 percent increase in inflation-adjusted median property prices from the first quarter of 2009 to the first quarter of 2010.

This rate clearly tramples the 11.4 percent increase from the previous quarter. Because of which, Warren added that affordability, low interest rate figures and property purchase incentives from the government proved to be the backbones for the increase in property sales by stabilizing prices after the property price downfall in 2008 and 2009.

Among the developed countries that were included in the Scotiabank report, the property market of Spain proved to be the weakest for its property prices declined from the first quarter of 2009 to the first quarter of 2010 by an average of six percent.

The rise of  0.25 per cent means an increase to 4.5 per cent on the cash rate.  This will add about $46 a month to repayments on an average $300,000 home loan if it’s passed on in full by lenders.

This rate increase is the RBA’s sixth since last October.

The RBA says rates have now reached their average level but warns that inflation is likely to further increase by the end of the year.

The RBA will seek to deter inflation and try to take some of the heat out of the housing market, where Melbourne prices lead the nation.

It comes as an overwhelming majority of economists expected a rate rise, with money markets also putting the chances of a rate hike at 70 per cent.

RBA Governor Glenn Stevens said during a business forum in Toowoomba that the recovering economy triggered them to bring back interest rates close to the average level for the past 10 to 12 years.

Also, Stevens defended the five rate hikes that the RBA did for the past seven months. He claimed that at the time of the global financial crisis, interest rates had only gone up one-third of the speed of rate cuts during the period.

Because of which, the financial markets believe the chances that there will be a rate movement by the RBA next month is only one-in-four. However, the change in interest rates might depend on the inflation rate of the first quarter of 2010.

Last year, the Reserve Bank predicted that the inflation rate would drop from 3.25 percent by the end of 2009 to 2.5 percent by June 2010. The 2.5-percent projected inflation rate is the median of the RBA’s target range.

When this happens, this would trigger price movements of 0.6 percent or lower over the succeeding two quarters which is expected by economists in the private sector. Because of which, Stevens added that the country would be handling some of the highest commodity prices over the last half-century and the investment level is at the highest level over the last century.

Stevens also mentioned that since commodity prices are reverting to their 2008 levels. During that year, the boom in resources increased the inflation rate to five percent while the cash rate of the RBA went up to 7.25 percent. This boom in commodities would trigger more demand for their products in the Asian region and it would counter deflation in Europe and in the United States.

Also, Stevens claimed that the RBA expected the mining sector to boom one again. When this happens, they believe that the tight government and consumer spending will be reversed. However, Stevens added that there are still some risks in investments but this will be negated by the resource sector.

 Because of which, economists of Commsec, the investment arm of the Commonwealth Bank, and Macquarie Bank have also predicted that the official cash rate will go up to 7.25 percent by 2012 if the country’s economy continues its strong growth.

 Due to the expansion of profit margins by banks during the global financial crisis, it is possible that variable mortgage rates will increase by 10.1 percent. This would be the highest variable mortgage rate since 1996.

 Citibank chief economist Josh Williamson stated that since bank rates are 2.90 percent higher than the official cash rate, mortgage rates can reach double figures if the cash rate is increased even if it is not as high as the last increase.

 Macquarie Bank’s interest rate strategist Rory Robertson also said that if the economy continues its rise, a soaring labour market will force the Reserve Bank to increase its rates. Robertson also added that the RBA is just trying to prevent a same scenario like the Lehman Brothers downfall in 2008.

Also, Commsec senior economist Savanth Sebastian proclaimed that cash rates can go back to its pre-crisis numbers if the prices of coal and iron ore will steadily rise. He also added that the imminent rate hikes is a repeat of the boom of commercial commodities in 2003 and 2008 although this latest rate hike might exceed the numbers that were tallied during those years.

 However, this development might bring fear to many households especially those who brought out everything that they can to buy properties in record-low numbers last year. Once the ten-percent mortgage rate is effective, a borrower with a $300,000 mortgage and a 5.75 percent mortgage rate will have his monthly repayments rise from $1887 to $2726. Even a 9.5 percent mortgage rate will prompt a $734 increase in mortgage.

 Due to the possible increase, mortgage brokers have urged buyers to add two percentage points as rate adjustment to their mortgage calculations before they decide to borrow. This way, they won’t be caught off guard when the mortgage rate hike becomes effective.

 If the mortgage rate hits 10 per cent, Fujitsu Australia has created a mortgage stress index which shows that about 1.1 million households might incur repayment problems. However, the index also showed that house prices will stay put due to steady employment and continuing property shortage.

Because of these figures, Fujitsu Australia director Martin North predicted that prices will only fall for a small figure but they won’t crash drastically. However, there is a possibility that the first home buyers that were helped by the government incentives might sell their properties which can lead to a weakening property market.

 When this happens, AMP chief economist Shane Oliver said that the high mortgage rates will increase the number of delinquent borrowers although property prices might decrease by ten percent.