First Home Buyers have FOMO when it comes to the property market, says ME
Heard of FOMO - the Fear Of Missing Out?
In its most recent Quarterly Property Sentiment Report, ME found that Aussies looking to buy a home for the first time are actually more interested in securing a property in the next year. 51% of potential first home buyers want to jump into the market in the next 12 months compared to 38% in the second quarter of 2019.
“Rising property prices carry the risk of squeezing first-home buyers out of the market, however they also signal a healthier market that presents a worthwhile long-term investment,” ME’s General Manager, Andrew Bartolo.
“In the case of first home buyers, the recent property price recovery has likely nudged them to get in while they can – as though it’s ‘now or never’ – and has created a sense of FOMO.”
Plus with the addition of the Federal Government’s new First Home Loan Deposit Scheme that launched at the beginning of the year, some borrowers will be able to enter the market sooner.
Under the scheme, the government will guarantee up to 15% of a mortgage for borrowers with a deposit as low as 5%, meaning they’d avoid the extra cost of Lenders Mortgage Insurance.
However the scheme is limited to the first 10,000 approved applicants, so not all first home buyers will receive the guarantee.
RELATED ARTICLE: Why 2020 is the year of the first home buyer and property investors
The report also found that 55% of respondents believe property prices will escalate over the next year, which jumped up from a mere 38% in the 2019 Q3 Property Sentiment Report conducted by ME.
“Considering a combination of market factors including the buzz of home value growth, a solid spring selling season, plus rate cuts and signs from the RBA that rates will stay lower for longer, it’s no surprise overall property sentiment has improved,” said Bartolo.
But there are still some concerns…
There were a couple negatives that came out of this quarter’s Property Sentiment Report, despite overall sentiment towards the property market improving for the third quarter in a row.
Naturally, with the potential for property prices to rise, concern about housing affordability is growing amongst house hunters. A whopping 92% of respondents identified housing affordability as a big issue in Australia, up from 89% at the end of last year.
Similarly, 46% of Aussies agreed that there isn’t enough choice in the market, and over half (57%) of first home buyers felt the same way.
“Housing supply has picked up slightly, but with prices rising and demand outweighing supply, there’s no wonder that almost 1 in 2 Aussies don’t think there’s enough choice available,” said Bartolo
“With so many first home buyers planning to buy in 2020, yet most stating choice in the market is a barrier, addressing this issue should be a focus in the year ahead.”
RELATED ARTICLE: 7,000 more slots to open with the First Home Buyers Deposit Scheme
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First Home Loans 2020 - page last updated October 17, 2020
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