New research has revealed that Australia’s first home buyers face a tougher market than last year.
According to RateCity’s First Home Buyer Index Report, the threat of higher interest rates is putting first home buyers off buying property.
The RateCity Index jumped up by 9 points to 120 points in February 2011 compared to February 2010. This is the highest level of difficulty that first home buyers have faced in 18 months.
“There’s no doubt that first home buyers are nervous about their chances of getting a foothold in the property market, and the biggest issue is increased repayments from higher interest rates. We’ve seen the benchmark basic variable rate increase by 115 basis points in the past year to 7.17 percent. Also, lower government grants for first home owners, plus general consumer uncertainty are hanging over the market,” RateCity chief executive Damian Smith said.
"The average first home buyer is paying around $164 more per month in mortgage repayments compared to 12 months ago, which has a big impact on the family budget.
“As a result, the level of activity from first home buyers is historically low. Compared to 12 months ago, the proportion of first home buyers out of all home loans financed has fallen by 3.7 percentage points to 14.9 percent.”
But despite the report’s findings, Mr Smith said those first home buyers that are confident about their employment prospects and have savings in the bank would be wise to get onto the property ladder sooner rather than later as house prices ease, and in some cases fall, across the nation.