SYDNEY (CU)_House prices in Australia are currently escalating at a record level, creating an affordability crisis that is forcing first home buyers to drop out. Last year, a significant number of investors pulled out of the market on account of falling prices, while owner-occupiers raced against the clock to make the most of ultra-low interest rates, as they sought for bigger spaces amid pandemic-induced lockdowns. However, according to a Sydney-based real estate business, now the tables have turned, with an increasing number of first home buyers, who have been forced to take out larger home loans, exiting the market.
Of the transactions that were concluded through Ray White over the weekend, investors accounted for around one-quarter on both buying and selling, the company’s chief economist Nerida Conisbee said, adding that there has been a “big pickup” in investor activity, in comparison with last year. “We know they [investors] pulled out of the market primarily because prices were falling, and they weren’t getting any advantage from grants such as HomeBuilder. But they’ve really surged back into the market this year,” she noted.
According to Conisbee, data compiled by the real estate firm also show that the number of investors who are selling and buying were equal, which suggests that investors are generally selling to other investors. She also revealed that these investors are likely to be pushing up pricing, event in cheaper suburbs, since “we haven’t seen any migration numbers and first home buyers have backed out”.
Experts say that affordability remains the key reason for the growing absence of first home buyers, as data published by Equifax show an 18 per cent average increase in home loans obtained by first home buyers during the 12 months leading to the end of September, a significant rise from the 12 per cent increase reported by existing mortgage holders. The average loan taken by a first home buyer in the Trans-Tasman stands at $493,000, an increase of over $75,000 during the 12 months to the end of September.
