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The Return of First Home Buyers

First-home buyers are on the rise across Australia, with new buyers now accounting for almost a quarter of the owner-occupier market. According to figures from the Real Estate Institute of Australia (REIA) Housing Affordability Report, first-home buyer numbers increased by 36 percent over the year on a nationwide basis. New South Wales is leading the charge with a 70.9 percent increase between September quarters, thanks in part to good housing incentives, increased apartment stock, and less competition from investors. 

According to the REIA, almost 29,000 new first-home buyers entered the market during the September quarter. According to separate figures from the Bankwest First Time Buyers Report, there were more than 94,000 first homes bought across Australia in the year ending August 2017, representing a 5.6 percent increase over the year. There are many reasons for this increase, including stamp duty concessions, tighter lending to investors, and lower interest rates. The proportion of family income needed to meet loan repayments has also dropped over the last few months, meaning it's easier for people to make the jump into the housing market.

According to Tim Reardon, principal economist for the Housing Industry Association, current market conditions in Australia represent “the best opportunity for first-home buyers in some time... There were seven different pieces of regulation coming in around property – and none of them affecting first home buyers. So they are – rightly so – given the inside running... Changes to APRA rules have increased the relative interest rate for investors. Their numbers have dropped, making room for first-home buyers... NSW and Victoria introduced quite good incentives for first-home buyers."

The proportion of family income needed to meet home loan repayments has fallen slightly across the country, dropping 1.2 percent to 30.3 percent of overall income according to the REIA report. Affordability improved in all states and territories, both during the September quarter and over the last year. While NSW and Victoria are still the least affordable places in the country to own property, mortgage affordability improved in both states over the last three months. The proportion of income needed in NSW to meet home loan repayments dropped 2.1 percent over the quarter to 36.1 percent, with numbers in Victoria dropping 1.2 percent to 32.2 percent.

In the NT, 19.4 percent of income is needed to meet mortgage repayments, and in the ACT it’s just 18.5 percent. In WA, first-home buyers make up the biggest percentage of the owner-occupier market at 36.2 percent, with WA also the most affordable state for rentals with just 17.4 percent of the average income spent on the median rent. Rental affordability decreased in four of Australia's eight states and territories, with NSW the least affordable state for renters, followed by Tasmania. The proportion of family income needed to meet rent payments was steady in Victoria at 23.1 percent, with Queensland, South Australia, and the Northern Territory all seeing an improvement in rental affordability over the quarter.


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