Challenges for first home buyers this spring
The recent sales results and analysis from the REIV show that different segments of the market are experiencing differing levels of demand.
Demand has cooled in the upper end of the market, as prices seem to have peaked; yet in the middle and affordable segments, demand is still quite strong.
This has occurred for the same reason that saw the market rebound so rapidly from the problems of the global economy. Demand is underpinned by a steadily growing population and the subsequent increase in demand for housing. The resulting disparity between demand and supply, when supported by a good local economy and low unemployment, has resulted in strong conditions for residential property.
This gap between demand and supply is not likely to disappear any time soon and, as a result, affordability is the major concern facing buyers. This is a problem for first home buyers in particular, who don’t have the advantage of benefiting from capital growth in the way that second and third home buyers do. That is why they need the support of our governments.
According to the Australian Bureau of Statistics, the number of Victorian first home buyers has fallen from around 4500 in the autumn of 2009 to 2500 in recent months. This is a substantial drop, which occurred because the level of assistance available to Victorian first home buyers fell.
Victorian first home buyers purchasing an existing home are entitled to exactly what they were entitled to a decade ago, the $7000 grant. Unfortunately, as house prices have more than doubled in that time, the grant is worth less than half in real terms.
First home buyer assistance needs urgent reviewing and improving or thousands of young people will miss the opportunity to buy their own home.