Property News

First-time buyers in market for property

8 January 2007

The property market is preparing for an influx of first-home buyers, in a sign the beleaguered residential sector is slowly recovering.

The number of people intending to buy their first home within 12 months surged 20 per cent in the three months to September, according to a survey by Nielsen Media Research. First-home buyer activity, which deteriorated rapidly after the property boom in the eastern capitals, is considered a "lead indicator" for the state of the property market. It has been lifting slowly in recent months.

The report, commissioned by Wizard Home Loans, found improved buyer confidence was driven by wealthy renters. Respondents with household income of more than $100,000 accounted for half the lift in sentiment.

"First-home buyers in this income bracket are feeling financially confident and account for 20 per cent of all intending first-home buyers," said Wizard Home Loans chairman Mark Bouris. The proportion of first-home buyers in the market increased slightly to 17.7 per cent in October, well above the low of 13 per cent after the property boom in early 2004, but still below the long-term average of 21 per cent.

Bjarne Hansen is one of those well-heeled first-home buyers with a six-figure household income. He settled on a $500,000 apartment in Erskineville, in Sydney's inner-west, last month.

"Prices are a bit high but realistically I don't think prices are going to come down," he said. "I don't think they're going to go up much either over the next couple of years, so I think now and any time in the next 24 months would be a good time to get in and buy something."

Mr Hansen said a no-deposit home loan had enabled him to buy the apartment he shares with his partner because it meant hehad money reserved for an emergency.

Housing Industry Association chief economist Harley Dale warned the survey results should be interpreted with caution because some of those prospective buyers may have been deterred by the November rate rise.

Mr Dale said while the proportion of first-home buyers in the market had been slowly improving, recent figures showed total new home sales - to investors and first-home buyers - were at their lowest point in six years. Those results indicated the market had been hit hard by the three 0.25 per cent rate hikes in six months, he said.