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First Home Buyer Numbers Are Above Average Across Every State And Territory

According to ABS housing finance data for August 2019, first home buyers comprised the largest proportion of national owner occupier mortgage activity since early 2012.  The data showed first home buyers comprised 29.8% of the national market for owner occupier home loans; almost five percentage points above the decade average of 25%.  A similar trend can be seen across every state, with first home buyers a larger proportion of the market relative to the decade average.

There are a variety of factors that have provided first time buyers with a leg up into the housing market.  Housing affordability has improved through the recent housing downturn, mortgage rates have come down, home loan servicing rules have been relaxed and some states have provided additional incentives for first home buyers in the form of stamp duty exemptions or discounts as well as existing first home buyer grants which generally apply to the purchase of new dwellings across most states.  

There’s also the fact that first home buyers haven’t had to compete as fiercely with investors, with investor activity generally trending lower since peaking in 2015 at 43% of mortgage demand.  The August update shows investors comprised only 26% of mortgage demand which is well below the decade average of 34%.

First home buyers are the most active across the Northern Territory and Western Australia where this segment of the market comprises 45% and 37% respectively of owner occupier mortgage demand.  These are also the two regions where housing values have fallen the most, providing a substantial improvement to housing affordability.  Dwelling values are down 27% since peaking across the Northern Territory and 23% lower since peaking across Western Australia.  

The regions where first home buyers are the least active are South Australia and Tasmania where first time buyers comprised 22% and 24% of owner occupier mortgage demand in August.  Despite being the lowest of any state, first home buyer participation remains above the decade average in these regions. 

Looking forward it’s likely first home buyer’s will reduce as a proportion of overall market activity.  Housing prices are once again rising across most regions of the country while growth in household incomes remain sluggish, which will create renewed housing affordability pressures in markets where home values are rising faster than incomes. 

Source: The Real Estate Conversation 4th November 2019 https://www.therealestateconversation.com.au/blog/tim-lawless/first-home-buyer-numbers-are-above-average-across-every-state-and-territory

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

 

A third of first home buyers opting for investment property over first home, report reveals

One-third of first home buyers are choosing to purchase an investment property rather than a first home to move into, new research from the Property Investment Professionals of Australia has revealed.

The 2018 Property Investment Professionals of Australia (PIPA) Investor Sentiment Survey found 36 per cent of first home buyers have chosen to invest in property and continue renting, rather than buying a home to live in over the last 12 months.

PIPA Chairman, Peter Koulizos told WILLIAMS MEDIA the research suggests ‘rentvesting’ as an investment strategy has been a trend for some time.

63 per cent of survey respondents said they would consider ‘rentvesting’ as a property investment strategy.

Related reading: What is rentvesting?

“First-time property buyers generally have probably been more active over recent years than official statistics originally recorded,” he said.

“The Australian Bureau of Statistics (ABS) publicly admitted issues with first home buyer statistics from 2012 to 2016, in part due to some lenders only reporting loans to first home buyers who received a First Home Owner Grant. Of course, most grants were restricted to first-timers buying a new property as their home not as an investment many years ago.”

According to the latest ABS statistics, about 18 per cent of properties financed in Australia in September was to first home buyers.

Mr Koulizos said revisions to the official data meant that first-time investors were now being counted, but issues could reportedly still persist in the statistics according to the ABS.

“There’s no doubt that the softer market conditions are making it easier for first-time buyers when it comes to purchasing prices, however, lending restrictions are conversely making it more difficult for them to secure finance,” he said.

“On top of this, it appears that recent political assertions that first-time buyers are only one in seven purchases – or 14 per cent – is factually incorrect.

“It seems that the dream of property ownership has remained alive and well for some time, with many first-timers opting to improve their financial futures by investing in more affordable locations while renting elsewhere.”

The survey also found the vast majority of first-time buyers had opted to buy an existing property, even with State Government grants available to purchase a new dwelling.

“About 83 per cent of first-timers purchased existing property with only 14 per cent buying new or off-the-plan.”

“This is partly due to affordability considerations with established properties generally available for lower prices points than new, plus the majority of all investors always prefer existing properties.”

Mr Koulizos said this was yet another reason why proposals to change negative gearing policy to supposedly increase supply were ill-conceived as most investors buy established property and pay little regard to new property.

“Established property has greater capital growth and any tax benefits associated with new property generally doesn’t make up for comparably poorer price performance over the long-term,” he said.

Source: The Real Estate Coversation Dec 6 2018 https://www.therealestateconversation.com.au/news/2018/12/06/third-first-home-buyers-opting-investment-property-over-first-home-report-reveals

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.