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High price, high reward for first-time home owners
Rising house prices have not deterred first home buyers from looking to get on the property ladder, with interest from first home buyers growing, according to a study.
High price, high reward for first-time home owners
Rising house prices have not deterred first home buyers from looking to get on the property ladder, with interest from first home buyers growing, according to a study.
First home buyers’ hopes of breaking into the property market have jumped, with 51 per cent of first home buyers planning to buy property in the next 12 months compared to 38 per cent in Q2 2019.
ME’s general manager, Andrew Bartolo, said encouraging monetary policy and a long-term view of property growth is driving current first home buyers’ sentiments.
“In the case of first home buyers, the recent property price recovery has likely nudged them to get in while they can – as though it’s now or never – and has created a sense of FOMO,” Mr Bartolo said.
“Low interest rates and commentary in the market for the support of first home buyers may have also contributed to an increase in home-buying intentions.”
Not only are first home buyers not deterred by higher prices, the survey results also showed over half of respondents believe the property market would continue to grow.
Over half (55 per cent) of respondents predict prices to rise over the next 12 months, compared with 38 per cent who predicted price rises two quarters ago.
Strong house value growth is predicted by Victorians more than those in any other state, with 67 per cent of Victorian respondents predicting prices to go up – a 10 percentage point jump from last quarter’s prediction, and a 34 percentage point jump from their Q2 2019 prediction.
All other major cities had a more positive outlook on prices than last quarter, including WA where last quarter more were predicting price falls than rises.
Positive house price expectations were seen across owner-occupiers, first home buyers and investors.
The report showed sentiment towards the property market has improved for the third quarter in a row, increasing to net positive 21 per cent (up by 3 percentage points from Q4 2019, and up by 14 percentage points from Q2 2019 when the report first started).
“Considering a combination of market factors including the buzz of home value growth, a solid spring selling season, plus rate cuts and signs from the RBA that rates will stay lower for longer, it’s no surprise overall property sentiment has improved,” Mr Bartolo said.
Finally, the report found despite growing positivity towards the property market, consumers still view affordability as a key risk and believe the current market lacks options.
Ninety-two per cent of respondents agreed that “housing affordability is a big issue in Australia”, up from 89 per cent in Q4 2019.
ME’s report showed that 14 per cent agree with the statement “I’m worried about property becoming unaffordable”, making it the top worry.
The report also tracked the perception of choice in the property market and found almost half (46 per cent) of total respondents believe there is not enough choice, with this figure jumping to 57 per cent among first home buyers.
“Housing supply has picked up slightly, but with prices rising and demand outweighing supply, there’s no wonder that almost one in two Aussies don’t think there’s enough choice available,” Mr Bartolo concluded.
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