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They’re back! First home buyers jump back in to the market

By Emma Smith

FIRST home buyers have made a bold return to the property market after months on the sidelines — and they didn’t even need to be enticed by government incentives.

The latest report from the Real Estate Institute of Australia and Adelaide Bank reveals the number of first time buyers increased by 14 per cent during the June quarter to 23,559.

That’s despite government grants for first time buyers in some states not coming into effect until July 1.

The average loan size to buyers in the market for a first home is now $386,664 — up by 3.7 per cent.

Of all buyers in the market for their first home in the three months to June 30, more than a quarter were from Queensland.

The number of loans to first home buyers in the state increased by nearly 12 per cent per cent over the quarter and rose by nearly 20 per cent compared to the same period a year earlier.

But Victoria tops the charts as the state with the largest number of first home buyers, followed closely by Queensland.

The June quarter edition of the Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report shows a slight decline in housing affordability nationally, with the proportion of median family income required to meet average loan repayments increasing by 1 percentage point to 31.4 per cent — just above the 30 per cent threshold usually used to define mortgage stress.

In Queensland, the proportion of income required to meet home loan repayments increased by half a per cent during the quarter to 27.2 per cent.

That’s up a modest 0.2 per cent on the same period a year ago.

But Adelaide Bank head of business development Darren Kasehagen said that shouldn’t overshadow the good news that first home buyers had made a comeback.

Queensland, Western Australia, Australian Capital Territory and the Northern Territory all experienced an increase in first home buyers during the June quarter, with the territories recording growth of 49.6 per cent and 40 per cent respectively.

“The average loan size to first home buyers increased by 1.2 per cent over the June quarter and 0.6 per cent over twelve months to $365,600 with the average loan size to first home buyers decreasing in South Australia, Tasmania and the Australian Capital Territory over the quarter,” Mr Kasehagen said.

“Year on year, the average loan size to first home buyers increased in New South Wales, Victoria, Queensland and the Northern Territory.”

There was also some relief for renters during the June quarter.

The proportion of median family income required to meet rental payments dropped by more than half a per cent to 24.3 per cent.

Rental affordability improved slightly in Queensland, dropping 0.7 per cent to 23 per cent of income required to meet median rents. Real Estate Institute of Australia president Malcolm Gunning said that while housing loan affordability had declined across the country, rental affordability had generally improved.

“This improvement was recorded across all states and territories except in Tasmania and the Australian Capital Territory,” he said.

“Historically, rental affordability declined markedly from the June quarter 2007 reaching its lowest point in the March quarter 2010.

“Since then rental affordability has been showing a trend improvement reflecting the pick-up in investment in housing from the end of 2011.”

Article written by Elizabeth Tilley and published on Realestate.com 06 September 2017
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