First home buying likely to subside

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November 01 2019
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First home buyers now comprise 29.8 per cent of the national market – almost 5 percentage points above the decade average – but is likely to decline again.

This trend of first home buyers taking advantage of favourable market conditions has extended across every state as first time home owners cash in on the property downturn and lower mortgage rates.

However, CoreLogic has noted that first-time home buyers have not had to compete as fiercely with investors more recently, with investor activity generally trending lower since a peak in 2015.

CoreLogic’s head of research Tim Lawless believes a less active first home buying segment will again lead to investors moving into the market.

“Looking forward, it’s likely first home buyers will reduce as a proportion of overall market activity,” he indicated.

“Housing prices are once again rising across most regions of the country while growth in household incomes remain sluggish, which will create renewed housing affordability pressures in markets where home values are rising faster than incomes.”

Mr Lawless also does not expect the First Home Loan Deposit Scheme, which comes into effect from January 2020, to have an impact on the market.

While he admits it’s likely “to be oversubscribed”, he doesn’t expect program to make a substantial difference to overall first home buyer participation rates considering the scheme is capped at 10,000 buyers, which equates to less than 10 per cent of first home buyers numbers over the past year.

With first-time home buyers leaving the market, the property expert again pointed to improved investor activity as the prospects of capital gains become widespread.

“Capital city gross rental yields are tracking at 3.7 per cent compared with three-year fixed rate mortgages for investment purposes tracking around 3.8 per cent. In the past, rising home values and greater participation from investors has seen first home buyer activity reduce,” Mr Lawless concluded.

nestegg has previously reported on first home buyers taking the leap into the property market.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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