No fair go for first home buyers
Article by Mozo
Potential first home buyers are being squeezed out of the housing market as investor activity drives up property prices. Just one in eight home loans are for newcomers, the lowest rate since records began, according to figures released this week.
In September, first home buyers made up just 12.5% of the market which is an all time low since records began in 1991 according to Australian Bureau of Statistics data.
Record low interest rates have stimulated a boom in the property market that has simply priced newcomers out of the market. Would be first home buyers who have saved for years for their home deposit are being outpaced by investors with significant capital to play with in their existing properties which is why new buyers are at the lowest proportion in more than two decades.
The problem is also compounded in major cities, Citi economist Josh Williamson says. "The great Australian dream is slipping away from some potential first-home owners in Australia's capital cities."
In Victoria, The axing of the first home buyers grant on existing properties has also affected what first home buyers can afford, limiting them to off the plan and new developments that may be even further outside of their price-points.
Opposition treasury spokesman Tim Pallas said the record low rates of first-home ownership showed that the government's decision to cut out the grant for established properties was locking younger people out of the market. "'The changes are having a profound effect on the capacity of first-home buyers to enter the market," he said.
Many first home buyers are now having to choose between sitting on the sidelines and trying to save a larger deposit (hoping that their savings can outpace market growth) or diving in with an unattractive LVR and expensive mortgage insurance.
For first home buyers who are taking the plunge finding a competitive home loans can make all the difference to home ownership success in the long term. For first home buyers who are overextending themselves, finding the right low cost fixed-rate mortgage could be the solution to keep home loan debt under control in the longer term and especially when rates do begin to rise.