A study by Riskwise Property Research has revealed first home buyers now make up around 18.1% of the market, an increase of 4.9% from July 2016.
Riskwise CEO, Doron Peleg, attributed the surge in first home buyer numbers to tighter lending restrictions imposed by APRA that are locking investors out of the market.
To be fair softer property market conditions in some capital cities are also encouraging first timers. That said, Hobart (up 9.3%), Brisbane (0.8%), Adelaide (0.7%) and Canberra (2.0%) continue to buck the broader trend according to the CoreLogic September home value index. Moreover, combined regional Australia values are growing at a combined annual average rate of 1.2%.
Longer-term, Doron Peleg said the lack of family-suitable housing may fuel future capital growth, making it tougher for younger Australians to break into the market. While developing more family-suitable housing is high on the Federal Government’s agenda, Doran argued a coordinated strategy to encourage a wider spread of the population across Australia must be initiated, along with more owner-occupier appropriate dwellings in middle-ring suburbs in the major capital cities. He added, “Without a strategic and comprehensive solution, it is likely that the current supply and demand patterns will once again lead to escalating prices, deteriorating housing affordability and a reduction in home ownership in Australia.”
The Riskwise chief contended that state governments must do more, “particularly in relation to planning, greenfield land releases, rezoning and a more co-ordinated approach between the states and the local governments”.
“In addition, federal to state governments and state to local governments should provide incentives for meeting pre-approved development targets and increasing dwelling supply,” Doron added. “Measures to accelerate the planning and approval processes should be introduced, along with measures to incentivise local governments to ensure development meets pre-agreed targets in relation to dwelling supply.”
Governments should be encouraged to increase land supply release and development through coordinated strategy and targets, said Doron.
“While land supply in Sydney and to a lesser extent Melbourne is limited in the inner and middle-rings, there is a certain level of supply in surrounding suburbs. Much of this greenfield development in Melbourne is less than 30 kilometres from the CBD; in Sydney it tends to be more than 40 kilometres from the CBD.
“Land releases in the outer suburbs are essential, particularly in Sydney. The outer suburbs are significantly more affordable, and they provide an opportunity to first home buyers to enter the property market.”