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Staff Reporter
Record low interest rates are pricing first home buyers out of the market, according to John Edwards, founder of Residex.
In a monthly property market update, Mr Edwards said low interest rates are benefiting investors but driving housing prices out of reach for many first home buyers.
“We are in a period where interest rates are low. This will be helping investors but for the first home buyer, the cost of housing is still relatively unaffordable,” he said.
Mr Edwards said the recent changes to the laws governing Self-managed Super funds have also resulted in increased investment in the property market.
“The ability of Self-Managed Super Funds to now structure and use contributions for negatively geared property means a new class of investor is active in the market,” he said.
A third driver of the increased investment in the property market, according to Mr Edwards, is decreased confidence in the stock market.
“Private investors are seeing high risks in the stock market due to the likely wind back of the United States’ quantitative easing monetary policy”.
“As a result, they are looking for low risk, higher yield assets such as housing,” he said.
“In short, the growth period that is underway is being driven mainly by investors in a market where most cities have a shortage of stock,” said Mr Edwards.
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