Invest
FHB surge as ‘it’s now cheaper to buy than rent’
Record-low interest rates mean that it is now cheaper to buy than rent, with first home buyers taking advantage, doubling their participation in the market, a big four bank CEO has said.
FHB surge as ‘it’s now cheaper to buy than rent’
Record-low interest rates mean that it is now cheaper to buy than rent, with first home buyers taking advantage, doubling their participation in the market, a big four bank CEO has said.
With the official interest rate at a record low 0.1 per cent, NAB CEO Ross McEwan pointed to a surge in first home buyers, even though the capitals are currently in a hot market.
In a media interview with 2GB, Mr McEwan said that contrary to popular sentiment, low interest rates have not priced first home buyers out of the market.
“Well, an interesting thing about first home buyers – there are more first home buyers getting into this market than we’ve seen probably for the last five to 10 years,” the CEO said.
“On our book alone, about 16 per cent of new lending is going to first home buyers. Traditionally, that was about half that amount. So, first home buyers with low interest rates are finding it cheaper to actually buy as long as they’ve got a deposit. And the government’s been very helpful there – it’s cheaper to buy than it is to rent because interest rates are so low.”
The CEO pointed out that prices are spreading, with buyers looking to purchase within one hour of major CBDs.
The exodus from metro areas has seen buyers take advantage of working-from-home arrangements, swapping inner-city apartments for larger freestanding dwellings.
“We’re seeing a big trend of people moving out of the city, and house prices out of the main centres are going up much higher than those in the inner city,” Mr McEwan said.
Despite rising house prices, the head of the big four bank still does not believe the RBA will be looking to lift rates in the near term.
“Look, I think rates are going to stay low for the next two to three years. The Reserve Bank is pretty determined to keep them low for 2022-23, and I think that’s going to be the case,” he said.
Instead of lifting rates, the CEO believes the RBA and regulatory providers could take the heat out of the market through curing mortgage lending.
“Well, we’ve been making sure that we haven’t been loosening out on the strings of how do you get a home loan. And I think what my chairman is saying is that if this keeps going, he may see the RBA actually stepping into the marketplace and curbing certain parts of it. You’re seeing this happening in New Zealand at the moment. I’m not saying it’s going to happen, but there is a chance that if they see that,” Mr McEwan concluded.
About the author
About the author
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
Real estate investment: Spotting high-growth potentials
Investing in real estate has long been a favoured approach for Australians looking to grow their wealth. Read more
Property
Granny flats become Aussie families' cost-effective solution to soaring living costs
As the cost of living skyrockets, a forward-thinking trend is sweeping across Australia – granny flats are becoming a favoured living arrangement for older Aussies seeking comfort and proximity to ...Read more
Property
Homebuyers grapple with extended savings period amid affordability crisis
Gone are the days when an Australian dream home seemed just within reach. The path to homeownership in Australia has extended by at least two arduous years, as revealed by the latest insights from ...Read more
Property
Hybrid development unlocks new potential for NDIS housing in metro hotspots
In a ground-breaking strategy aimed at addressing the stark imbalance between the location of Specialist Disability Accommodation (SDA) developments and the actual areas of demand, Aligned Disability ...Read more
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. Read more
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
Real estate investment: Spotting high-growth potentials
Investing in real estate has long been a favoured approach for Australians looking to grow their wealth. Read more
Property
Granny flats become Aussie families' cost-effective solution to soaring living costs
As the cost of living skyrockets, a forward-thinking trend is sweeping across Australia – granny flats are becoming a favoured living arrangement for older Aussies seeking comfort and proximity to ...Read more
Property
Homebuyers grapple with extended savings period amid affordability crisis
Gone are the days when an Australian dream home seemed just within reach. The path to homeownership in Australia has extended by at least two arduous years, as revealed by the latest insights from ...Read more
Property
Hybrid development unlocks new potential for NDIS housing in metro hotspots
In a ground-breaking strategy aimed at addressing the stark imbalance between the location of Specialist Disability Accommodation (SDA) developments and the actual areas of demand, Aligned Disability ...Read more
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. Read more