- Housing affordability, jobs availability and transaction costs are all part of the FHB equation
- Stability is two-ways attractive –security of tenure and wealth creation
- More first home buyers may look to buy for investment rather than to live in
The REIA recently reported that first home buyers, as a proportion of total owner-occupiers, are at the highest level since July 2013 and the number of first home buyer home finance commitments is the highest since December 2009.
New stamp duty exemptions and concessions in NSW and Victoria began on the 1st of July this year, which were designed to dampen investor activity and increase first home buyer activity.
“The FHB data the ABS released in August showed an increase in the number of entry-level buyers in NSW, which was probably the result of the stamp duty concessions introduced there.
But Davoren also says that in both FHB and other investor sectors there is a greater need for assistance in some markets than others.
“There are markets where more investors are needed; so give incentives to the investors not disincentives,” Mr Davoren suggests.
But just as in the question of FHB grants and new versus existing property, Mr Davoren says it is too hard to introduce different rules for different markets.
“Trying to apply market-by-market rules would be a logistical nightmare.
“There is already a shortening of existing housing stock in almost all major centres. All new construction is future stock, which we welcome. This is why outer suburbs where there has been investment in housing construction are doing well.”
Mr Davoren is also seeing the rise of the ‘rentvestors’ first hand, particularly in young professionals.
“If you are a FHB living in Sydney for example, it is too costly to buy where you want or need to live. It makes sense to buy into areas where you can afford, and buy for investment.
“In Sydney now, according to Domain, there are no suburbs left with a median house price below $500,000 and suburbs under the $600,000 range are fast disappearing from listings.
“Of Sydney’s suburbs, Tregear and Willmot, were the closest to $500,000, with median house prices of $510,000 and $515,000 respectively, according to Domain’s September quarter data, and these are suburbs close to and a few over 50 kilometres from the CBD.
“Even young professionals with well-paid jobs struggle with the necessary deposit although they may be quite able to afford the mortgage repayments.
“My suggestion is to start looking eight to 10 kilometres radius from the CBD, but if property there is beyond what you have to spend, go out further. You can still invest well.”