The primary drivers of first home buying activity are increases in housing supply and economic growth. So with investor numbers falling and more property on the market, and a steady Australian economy, now may be the right time for you to buy your first home.
A recent analysis of Australian home buying trends has found that Victoria recorded the greatest increase in first home buying activity over the last 12-months. This state also recorded the highest number of new build completions since 2009. Queensland, on the other hand, recorded a high level of new home completions, and has the 2nd highest rate, by state, for first home buyer lending, according to the Australian Bureau of Statistics (ABS).
First home buying numbers typically tend to increase when either the Federal Government or state government raise their FHOG. Lets look at the data:
First Home Buying Data
Source: Australian Bureau of Statistics (ABS)
Economists suggest that housing supply increases are assisting to make homes more affordable for first home buyers. The same economists also suggest that favourable national economic conditions stimulate greater buying activity.
According to ABS data, the first significant rise in first home buying activity occurred in 2009. Driven by the onset of the global financial crisis (GFC), the Federal Government offered first home buyers a stimulus package. The next peak in first home buying activity occurred in 2013 when state governments offered first home buying incentives.
Overall, on a national level, first home buying has fallen since 2013. However, there is a high variation in state activity, which is said to be dependent on economic conditions. For instance, Western Australia had strong first home buyer numbers from 2009 to 2014 when mining was booming, but these figures have decreased significantly in 2016 as mining activity has almost ceased.
A states economy is an influencer for first home buyers as the home buyer has greater confidence and a sense of increased financial stability. Economically speaking, Australias weakest states were Western Australia and Tasmania; these states also have lower population numbers than other states. New South Wales continues to be the exception to the trend, as it has strong growth in new builds and a strong economy, but housing affordability remains to be a problem.
The Perth property market shrunk with its economy, whereas Tasmanias is continuing to grow along with its economy. Hobarts property market is said to be one of the tightest in the nation with 25% less homes in this city on the market, compared to 12-months ago. Hobart rental vacancy rates are low and rental yields high, with property prices increasing.
Sydney predominately has a short supply of homes. This lack of accommodation is consistent with low levels of dwelling completions that have occurred across the state in comparison to population growth.
Over the last 5-years, Sydney building approvals have risen considerably. This increase has seen pricing growth moderate. If supply were not as high in this area of Australia, then prices could be even greater than they currently are.
Record low-interest rates have also enabled first home buyers to gain access to funding and encouraged them to save more. Those first home buyers who can provide a potential lender with a strong saving history also give themselves a higher chance of securing a home loan.
Are you looking to buy your first home? If you said YES, then contact eChoice. We can assist you to find an affordable home loan today.
Tags: Home Buying