Affordability-improving
22nd May 2009 | category [ Articles ]
AFFORDABILITY IMPROVING
As unemployment still weighs heavy on many
peoples mind, there has been little concern with
first home buyers, who are still snapping up property.
The HIA-CBA First Home Buyer Affordability Report released this week found that first
home buyer affordability improved by 14.6% during the first quarter of 2009 and now
sits at a seven year high. These results are unsurprising given the impact of the First
Home Buyers Grant Boost coupled with the lowest interest rates in more than 45 years.
Although some speculate that the boost to the First Home Buyers Grant will create Australia’s
own sub-prime market, these concerns seem quite unwarranted with most banks and lending
institutions having tightened their lending criteria and requiring a history of savings as well
as a deposit of at least 5% and in most cases 10% in order to be eligible for a home loan.
Whilst the impact of the First Home Buyers Grant Boost has been positive it is likely that
the low interest rate environment, property value falls through 2008 and escalating
rental rates is significantly contributing to first home buyers purchase decisions.Westpac
and the Melbourne Institute released their Consumer Confidence Index this week and
the index recorded its second largest fall in ten years.
The index now sits at 88.8 points well below 100 points which indicates that consumers
are more pessimistic than optimistic, as they have been for the last 16 months. The
results suggest that last week’s Federal Budget did little to convince consumers that
they should be optimistic. The overall tone of the Budget with its forecast of a record
deficit, rising unemployment and an economy which continues to slow would have done
little to boost the confidence of consumers. The index is showing a high degree of
volatility on a month to month basis during the last 12 months.
This is not unexpected given the uncertainty around global financial markets and conflicting
reports on an almost daily basis about the prospects of Australian markets. Evidence
has shown a sustainable increase in sales volumes within the Australian housing market
will be led by an improvement in consumer confidence. Locally there is less and less
stock available under $300,000. First home buyers are looking at anything on the market
and are buying properties that are in very average condition. Agents are listing properties
for far more than they are worth, just so they can get the listing, and beat the other
agent to the job. this is called “buying the listing”.
