First home buyers nationwide are baulking at making their initial plunge into the housing market despite the lure of stable interest rates through the RBA’s recent decision to hold the cash rate at 2.5 per cent.
According to the REIA Housing Affordability Report, first home buyer levels are currently at near-record lows and make up just over 10 per cent of the owner-occupier market.
Potential buyers in New South Wales, Western Australia and the Northern Territory were hit in the hip pocket during the June quarter, with the level of income required to service a mortgage increasing.
National Building Approvals, however, have hit a 30-year high with 193,667 homes approved over 2014.
President of the REIA Peter Bushby said most states and territories have placed restrictions on First Home Owner Grants for established homes at a time when we should be doing everything we can to help first home buyers onto the market.
“First home buyer levels continue to be at near-record lows making up only 12.7 per cent of the owner-occupier market compared to the long-run average proportion of 19.7 per cent … these low levels are persisting despite the RBA leaving the cash rate on hold,” Mr Bushby said.
“REIA is very concerned by the recent declines in home ownership in Australia and sees housing supply as the most urgent issue that needs to be addressed to improve housing affordability.”
The development of new housing in the future is a key factor of the Spring 2014 Australian Residential Development Outlook report from the Property Council of Australia. The report found Australia had typically produced 150,000 homes per year for the last decade, but this figures fails to account for future demand.
According to the report, the housing price-to-income ratio recorded in the March quarter was comparable with levels found in 2004.