Sub $500K house prices set to slide

Sub $500K house prices set to slide

09 July 2009 by Staff Reporter 1 comments

The end of the FHOG and various other government funded benefits could see lower end house prices fall by as much as 10 per cent, new analysis from CB Richard Ellis (CBRE) has revealed.

The analysis coincided with ABS figures released yesterday that showed the number of dwellings bought by owner-occupiers in May was 29 per cent higher than in October, when the boost to the first home owners grant was introduced.

The number of first home buyer commitments increased from 28.6 per cent in April 2009 to 29.5 per cent in May 2009, the figures revealed.

CBRE’s manager of residential research, Erin Rolandsen, said first home buyers had been instrumental in propping up house prices in the sub $500,000 market.

“The fact that first home buyers have been driving this boom leaves the sub-$500,000 market particularly vulnerable once the boost is reduced from September 2009,” she said.

“In all likelihood the withdrawal of the FHOG boost at the end of December and state-based measures in July 2010 will have a dampening effect on the sub $500,000 market, slowing sales transactions and causing price reversals in the sub-$500,000 market towards pre-boost prices.

“We expect falls could reach 10 per cent from the peak in some areas depending on local market conditions.”

Since the boost was introduced, rising house prices had increased the average first home buyer loan by $20,000.

The end of the FHOG and various other government funded benefits could see lower end house prices fall by as much as 10 per cent, new analysis from CB Richard Ellis (CBRE) has revealed.

The analysis coincided with ABS figures released yesterday that showed the number of dwellings bought by owner-occupiers in May was 29 per cent higher than in October, when the boost to the first home owners grant was introduced.

The number of first home buyer commitments increased from 28.6 per cent in April 2009 to 29.5 per cent in May 2009, the figures revealed.

CBRE’s manager of residential research, Erin Rolandsen, said first home buyers had been instrumental in propping up house prices in the sub $500,000 market.

“The fact that first home buyers have been driving this boom leaves the sub-$500,000 market particularly vulnerable once the boost is reduced from September 2009,” she said.

“In all likelihood the withdrawal of the FHOG boost at the end of December and state-based measures in July 2010 will have a dampening effect on the sub $500,000 market, slowing sales transactions and causing price reversals in the sub-$500,000 market towards pre-boost prices.

“We expect falls could reach 10 per cent from the peak in some areas depending on local market conditions.”

Since the boost was introduced, rising house prices had increased the average first home buyer loan by $20,000.

promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2016

With a combined sales volume of $13 billion in 2016, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
At the top of his game: how this agent evolves to stay number one

Get up close and personal with the best real estate sales agents in Australia in Secrets of the Top 100 Agents. ...

View all podcasts

Are dodgy agents being punished enough?

Yes (8.6%)
No (55%)
Only in some states (2.3%)
Not all dodgy agents are being found out (34.1%)

Total votes: 220
The voting for this poll has ended on: April 15, 2017
upcoming events
REB Awards
Sydney The Event Centre 12 Sep
REB Awards
Sydney The Event Centre 12 Sep
Melbourne The Event Centre 14 Oct
Brisbane The Event Centre 18 Dec
View all events
Do you have an industry update?