Affordability-improving
22nd May 2009 | category [ Articles ]
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”.