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Record rise tipped to hurt first home buyers
Record-low interest rates are tipped to help grow the property market by double digits in 2021, but those who are trying to get into the market could face struggles, new research has revealed.
Record rise tipped to hurt first home buyers
Record-low interest rates are tipped to help grow the property market by double digits in 2021, but those who are trying to get into the market could face struggles, new research has revealed.
Buyers Buyer co-founder Pete Wargent said the housing market is reaching new highs, which will consequently see dwellings become less affordable.
“While internal migration to regional areas somewhat mitigates the problem, there is still a major undersupply of family-suitable properties in popular areas with proximity to the major employment hubs,” he said.
Mr Wargent pointed out that opportunities could emerge in the apartment market, which is not experiencing the same growth as the housing market.
“High-rise apartments are not considered to be a fully substitutable product to houses and townhouses, and therefore will not materially impact the demand for houses. Housing affordability is likely to remain a chronic issue particularly in Greater Sydney, Greater Melbourne as well as popular areas in South-East Queensland.”
Archistar’s chief economist, Dr Andrew Wilson, said the toughest ask for first home buyers is to confront rising house prices because, as first-time buyers, they do not have a trade-in to bring to the market.
“A number of incentives for first home buyers will either cease or diminish, such as the first home buyer deposit scheme, which will finish in the first half of this year,” the economist explained.
As such, the COVID-19 economic downturn actually favoured new market entrants, with governments seeking to stimulate the economy by pumping more money into housing.
“First home buyers are active during times of economic stress because of low interest rates that improve affordability,” Dr Wilson said.
However, while first-time buyers could struggle, sellers are tipped to be the big winners as low interest rates, low supply and heightened demand flips the market from a buyers to a sellers market.
“It’s not uncommon to see lower stock levels over the summer break, but this year has been something else. Even as new listings have begun to pick up, supply is being comfortably outstripped by demand, and the market overall is very tight,” Mr Wargent said.
He said it is now projected that both Sydney and Melbourne will deliver capital growth in the range of 8-12 per cent in 2021.
Many areas are also likely to deliver double-digit growth over the calendar year. In particular, houses with a high land value component and scarcity value are likely to enjoy very strong demand and capital growth, both in the short and long term.
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