First home buyers (FHBs) are set to make a strong return to the housing market next year with numbers to rise by 21 per cent, according to new research.
LJ Hooker’s white paper, First Home Buyers: a dynamic and changing market, predicts around 110,300 first home buyers (FHBs) will be looking to make their first real estate purchase in 2014, up from 90,551 this year.
Victoria will see the most activity with 30,000 FHBs entering the market followed by New South Wales (26,000), Western Australia (22,000), Queensland (20,000), South Australia (7,500), ACT (1,900), Tasmania (1,800) and the Northern Territory (1,100).
Eric Barnes, LJ Hooker research manager, said the surge in FHBs would be fuelled by the increasing emergence of Generation Y, who were established in their careers and ready to buy.
“Typically these FHBs are well-educated, tech-savvy and market informed with a taste for quality housing,” he said.
“Some will be stay-at-home investors; living with their parents, building equity through property investment, prior to moving out.
“Others will be professional couples, paying a premium for CBD accessibility and eclectic neighbourhoods, while benefitting from their state’s FHB grants for buying new.
“There is the real likelihood that these Gen-Y buyers will leapfrog earlier generations in wealth terms - benefiting from property’s inherent compounding growth, by entering the market at an early age.”
Director of RT Edgar Boroondara, in Victoria Glen Coutinho told Real Estate Business he agreed with the forecast as current interest rates were low.
“If rates stay low I think we will see a lot of first home buyers in the market,” he said. “The other reason why we will see first home buyers in the market is rents are rising and it’s cheaper to buy real estate than it is to rent.
“The other reasons that’s driving people back to the market is the government is now stable and they’re set for the next four year. That gives people confidence that there will be no more major changes."
However, he added the underlying factor in first home buyer activity was that unemployment remained under control.
CEO of Harcourts NSW Rob Forde said the upward movement of Sydney prices would affect any growth in FHBs who were driven by affordability.
“I’d be expecting to see first home buyer numbers remaining pretty consistent through to next year and probably seeing the investors remaining pretty active,” he told Real Estate Business.
Recent data from Victoria-based listing site realestateview.com.au revealed that FHBs were leading the charge for property with the same amount of first timers entering the market in the three months up tol September as in the past three years.
However, the Australian Housing Outlook 2012-2013 report prepared by BIS Shrapnel predicted median price growth in Melbourne will slow to around three per cent in 2013/2014.