First home buyers are taking the property market by storm despite a decline in housing affordability nationwide.
Previously, first home buyers have made up about 30 per cent of the market, but in the last 12 months that number has jumped to just over half.
Real Estate Institute of Australia (REIA) president Adrian Kelly says government initiatives like the federal HomeBuilder scheme, and First Home Buyers Lending Deposit Scheme, have been a big encouragement for first-time homeowners.
“Australian first home buyers increased their market share to 50.4 per cent over 2020, motivated by low-interest rates and the range of first-home buyer incentives on offer.”
“Seeing this trend in conversion to homeownership is particularly great news given the challenges many tenants and investors faced over the pandemic,” he says.
“However, surging house prices could see housing affordability obliterated unless measures to improve supply are implemented. This particularly applies to regional parts of Australia.”
Over the last 12 months, the measure for housing affordability ranged from an increase of 0.1 percentage points in Victoria to an increase of 2.3 percentage points in New South Wales.REIA president Adrian Kelly
The Real Estate Institute of Australia’s (REIA) latest Housing Affordability Report shows that higher house prices and larger loans drove down housing affordability in December, although long term trends look more promising.
Across Australia, the proportion of income required to meet loan repayments – the measure for housing affordability – increased on average by nearly one per cent in the last 12 months, up to 34.8 per cent.
“The measure for housing affordability ranged from an increase of 0.1 percentage points in Victoria to an increase of 2.3 percentage points in New South Wales,” Adrian says.
“New South Wales is the least affordable state, where the proportion of income required to meet loan repayments is 44.6 per cent. Conversely, with an affordability rate of 21.9 per cent, it is now more affordable to buy than rent in the Northern Territory,” he says.
“Despite this, the market defied doomsday predictions with median house prices rising across the country in 2020, with demand driven mostly by first home buyers.”