The Real Estate Institute of Australia (REIA) has called on the federal government to inject much needed stimulus into the housing market as part of Tuesday's Budget.
“Since peaking in the early nineties, home loan affordability has been trending downwards to alarming levels,” REIA president Pamela Bennett said.
“The Reserve Bank did the right thing by lowering the cash rate, but now it seems the commercial lenders plan to keep a third of the discount themselves, which limits its benefit to borrowers.
“Interest rates are only part of the equation. There are budgetary measures we expect the government to take as well to ease the pressure on affordability and to help young people in particular to purchase their own home.”
According to Ms Bennett, first home buyers have been very cautious in early 2012, with the number of first home buyers as a percentage of total owner occupied housing commitments decreasing to 17.2 per cent in February – down considerably from the long-term average of 20.2 per cent.
“One of the most effective housing policy instruments in assisting first home buyers is the First Home Owners Grant, but it has been allowed to lose more than half its value relative to purchase prices since it was introduced in 2000. We are urging the government to review the amount currently provided,” Ms Bennett said.
“With more than two-thirds of first home buyers preferring established housing, it is also essential the scheme continues to apply equally to buyers of new and established homes.
"The treasurer can’t rely on the RBA and the banks to do all the heavy lifting on affordability. We’ll be looking to him on Tuesday night to show the government’s commitment to making housing more affordable for Australian families.”