Good news for first home buyers
It looks like the tide is turning for first home buyers in Australia. The data released by the Australian Bureau of Statistics in September shows that investor lending is decreasing, while lending to owner-occupiers is on the rise. Lending to first home buyers is the highest it’s been since 2013. In July 2017, first home buyers took up 16.6 percent of the lending market, up from 14.9 percent the previous month.
So what’s affecting these results?
House prices, in general, are easing in parts of the country. Recent CoreLogic data suggest house prices are down in Darwin and Perth and have slowed in Sydney.
The slowdown in house prices may be due to changes in the Australian economy, like the end of the mining boom. It is also due to measures introduced by the Australian Prudential Regulation Authority (APRA) to limit interest only loans, and reduce investor lending.
APRA’s intention was to make house prices more affordable and to improve access to the property market. Several months later, APRA’s decision is producing results.
First home buyer grants and stamp duty concessions may also be helping first home buyers enter the market. Earlier this year, NSW introduced the First Home Buyers Assistance, where first home buyers do not have to pay duty for homes up to $650,000. For homes over $650,000, concessions apply. In Queensland, the first home buyer’s grant was also boosted earlier this year.
While lending to first home buyers was much higher in 2009 than it is today, the recent increase is promising.
Also good for first home buyers is the news earlier this year, that the Turnbull government will be allowing young people saving for their first home to access their superannuation. Savers will be able to use compulsory pre-tax super contributions for their first deposit, up to $30,000. This will be implemented from July 2018. The idea is that people saving for their first home will have to pay less tax than if they were using a normal savings account.
First home buyers still have lots of saving to do, to be able to buy their first home. For some people, Mum and Dad might be able to help out. For others, relentless saving is the only option, short of winning the Lotto. Visit our blog for tips for saving for your first deposit.