Australia’s first homebuyers take the plunge
It’s been a long time coming, but it looks as though the Australian housing market is finally opening up to allow first homebuyers to take the plunge and buy their own homes.
If you’ve been paying attention to the housing market over the past five years or so, you’ll know that there has been a whole load of new incentives directed at first homebuyers to entice them – such as the first home buyer grants and stamp duty concessions.
That, along with the fact that there are less investors buying houses in Australia right now, means there’s more buying power available for those looking to purchase their first homes.
“We’ve noticed a return of confidence in the first homebuyer sector in recent times, particularly as home prices have eased in many parts of the country, not to mention measures to boost affordability having a positive impact,” says Homeloans’ Will Keall.
Investor activity and attractive incentives
Recent figures released by the Australian Bureau of Statistics (ABS) and analysed by leading industry experts CoreLogic show that first homebuyers are now flooding back into the market.
Property research analyst Cameron Kusher of CoreLogic explains: “Over recent years, first homebuyer activity has generally been tracking below average, however, each state and territory offers some level of incentive to first homebuyers including grants and tax concessions. Over recent years, some states and territories have increasingly offered stamp duty reductions for buyers with these going live last year in New South Wales and Victoria. As a result of these incentives and a slowdown in investor demand, activity from the first homebuyer segment has climbed over the past year.”
The ABS statistics state that nationally, there were 8,782 housing finance commitments in February 2018. Although the volume of loans was down on levels in late 2017, it was 33.1 per cent higher than the previous February. As a share of all owner occupier commitments, first homebuyers accounted for 17.9 per cent in February 2018 compared to 13.3 per cent the previous year.
And according to a recent article in The New Daily, stamp duty concessions are one of the key reasons why first homebuyers are choosing now to making their move: “In Victoria, first homebuyers are now exempt from paying stamp duty on new and existing properties under $600,000. For properties worth between $600,000 and $750,000 a sliding scale concession rate is applied. In NSW, first homebuyers are exempt from paying stamp duty on properties up to $650,000 and pay a reduced rate for homes between $650,000 to $800,000.”
Michael Mata of Your Investment Property magazine agrees: “Borrowing among first homebuyers has rebounded over the past year, due in part to relaxed investor activity and attractive incentives in NSW and Victoria.”
A snapshot of the states and territories
Current stats show that there has been a marked upturn in sales to first homebuyers over investors in both the NSW and Victorian markets recently and there’s also a marked increase in the ACT.
The ACT also showed a massive 177.7 per cent increase on the previous year with 261 first homebuyer housing finance commitments in February 2018.
Hobart is also showing strong housing growth, with The New Daily reporting that Tasmanian property prices are “the talk of the town lately, with Hobart streaking past the other capital cities in terms of housing price growth. ABS data doesn’t show a significant increase in interest from first homebuyers in Tasmania, however, despite recent speculation that first homebuyers would migrate to Australia’s southernmost state to take advantage of its affordable home prices”.
In other states, the statistics look slightly different, with Queensland first homebuyers accounting for 19.3 per cent of the market in February 2018 compared to 17.6 per cent a year earlier.
And South Australia, despite house values being the lowest of any mainland capital city, “has the lowest share of first homebuyer activity of any state or territory with 13 per cent of owner occupier commitments going to first home buyers, a year ago they accounted for a 10.5 per cent share”.
Trends in Tasmania and Northern Territory show that first homebuyers, although contributing to overall sales, are not the main market that is buying homes currently. In fact, in WA there were fewer commitments to first homebuyers than there were a year ago.
Overall these trends show that property values in Sydney and Melbourne are declining at a time in which first homebuyer activity is actually rising.
But one thing’s for sure and certain, no matter which state or territory you live in, 2018 is looking to be a very good time to be a first homebuyer.