Invest
Why 2021 is likely to be a bust for first home buyers
First home buyers are tipped to be the biggest losers in 2021, as house prices rise and government incentives dry up, ultimately acting as headwinds for people looking to enter the market, an economist has revealed.
Why 2021 is likely to be a bust for first home buyers
First home buyers are tipped to be the biggest losers in 2021, as house prices rise and government incentives dry up, ultimately acting as headwinds for people looking to enter the market, an economist has revealed.
According to Archistar’s chief economist, Dr Andrew Wilson, while economic downturns are typically an advantage for first home buyers, a turning market can be quite perilous.
“The outlook for first home buyers is much bleaker than last year because the cycle has turned,” Dr Wilson told Smart Property Investment.
“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.
“It’s a myth that higher unemployment and economic stress are bad for the housing market. It’s usually pretty good due to governments using the lever of lower interest rates to stimulate the economy to activate buyers.
“While the stress of unemployment usually impacts a portion of the population, typically they aren’t the home buying part of the market. So, in the short term, it is just a confidence thing,” he said.
Historically speaking, previous stimulus packages have seen a record number of buyers enter the market.
“First home buyers are the beneficiaries of specific grants or incentives to get the economy up and running again. We’ve seen it a number of times, with 2020 being no exception,” Dr Wilson said.
“The problem now, following last year’s strong results, is higher prices, flat income growth and a lack of incentives.
“So, you get a big boom one year and a bust the next,” he concluded.
RELATED ARTICLES
About the author
About the author
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
