PROSPECTIVE first-home owners are giving up their dreams of owning property in massive numbers as less generous government assistance and a tight housing market push the property ladder out of reach of young buyers.
Lower first-home owner grants have combined with above-average interest rates and higher house prices to scare first-timers away from the market, an economist with the Housing Industry Association, Matthew King, said.
”The exit of many of these first-home buyers has been exacerbated by the fact that housing availability is poor,” Mr King said.
The number of first-home owner grants in NSW has plummeted to 33,000 in the year to February, its lowest level since 2004.
This is down from 70,000 in 2009, when the grant returned to $7000 as the federal government wound back a $14,000 bonus that was part of its economic stimulus response to the global financial crisis.
Wentworthville was the top NSW suburb for grants in the last year, followed by Liverpool and Blacktown.
Principal agent at Best Real Estate Wentworthville, Trudy Cartledge, said the suburb was popular with first-home buyers, but competition for units and townhouses that suited lower budgets was increasingly fierce.
”There are more investors [who] have come back into the marketplace,” she said.
Ms Cartledge said affordability would improve over time: ”It just goes with the cycle of real estate.”
However, chief executive of broker Mortgage Choice Michael Russell said he was worried Australia was facing a generational shift in the ability of Australians to own their own home.
Figures from the Australian Bureau of Statistics show that first-home buyers made up 15 per cent of NSW loans in the three months to January, down from 21 per cent a year earlier.
”This is a quick and steep decline. I’m pretty sure it’s an all-time low,” Mr Russell said.
Adjusted for inflation, first-home buyers have to borrow about $300,000 on average, $100,000 more than they had to in 1998, adjusted for inflation. In the same period, the number of new houses and other dwelling units built by the private sector in NSW has fallen from more than 51,000 to 30,000.
First-home buyers unable to find suitable properties are also increasing the demand for rental properties.
The median price for Sydney rental houses rose 5.4 per cent in the year to March, to $485, the Australian Property Monitors quarterly report showed. Mr King said more land should be released for development, and approval processes streamlined to make it easier for developers to build homes.
Premier Barry O’Farrell has promised to boost the release of land from the state-owned corporation Landcom by 10,000 new housing blocks over the next four years to help young families buy a home.
Source: SMH, http://smh.domain.com.au/home-owning-dream-withers-20110416-1dim6.html