Buying a home has never been easy for most of us, but despite doom and gloom reports about housing affordability, the number of first home buyers grew by more than 23,000 – or 6% – during the 2016 December quarter, an increase of 0.5% on the same quarter last year.
The Adelaide Bank/REIA’s December Housing Affordability Report revealed the number of first home-buyers increased in all states and territories over the December 2016 quarter, a statistic that flies in the face of daily news reports claiming first home owners are being squeezed out of the market by investors.
“First home buyers now make up 13.8% of total owner occupied housing,” REIA President Malcolm Gunning said. “This rate has been dropping steadily over the past five years yet seems to have stabilised over the past 12 months.”
And while the size of the average loan for first home buyers increased by 1.3% over the December quarter to $323,633, there’s also no doubting house prices in capital cities, especially Sydney and Melbourne, have also sky-rocketed over the past five years. As a consequence, Raine and Horne’s Executive Chairman Angus Raine believes astute buying in regional areas remains an affordable option for first home buyers – if they buy in the right regions.
Angus said buyers should look out for regions with robust and diverse economies, strong employment prospects and population growth to ensure extra success. “These factors can help underpin decent long-term growth and rental yields and provide some cover against the effects of environmental influences that are often out of our hands such as flood and drought,” he said.
The impact of stamp duty – the typical stamp duty bill nationwide is now just shy of $20,000 per property transaction – on housing affordability also continues to hog the spotlight and news that from July this year, the Victorian state government will axe the tax for first homebuyers whose properties are less than $600,000 is a welcome move.
There will also be discounts for properties worth between $600,000 and $750,000, regardless of whether they are new or existing.
While this is great news for first home buyers Angus maintained that by relieving stamp duty pressures on empty nesters aged over 70 will also improve housing affordability by increasing the turnover of housing stock. “Empty-nesters are hindering the second home buyer markets in our major capital cities because the stamp duty costs for them to buy a smaller property or one in a different location are too prohibitive,” he said.