SOARING PROPERTY MARKET SEES AVERAGE FIRST HOME BUYER DEPOSIT SKYROCKET ABOVE $100,000
The property market continues to boom at an unprecedented rate, recording its largest rise in just under five years, as the average price of a residential property in Australia climbs above $720,000, and the rapid month-on-month increase in median price is the fastest seen in 32 years by a considerable amount.
In a true sign of the times, many first home buyers are having to seek out alternative measures of gaining finance for their deposit, with Mortgage Choice broker Marc Corley stating that approximately one-in-five of his clients have gone back to mum & dad to receive help in paying the deposit for their house. According to statistics provided by Digital Finance Analytics, if parents were classed as a mortgage lender in Australia, they would be the nation’s ninth-largest, with an estimate close to $34 billion in total loans. Digital Finance Analytics also found that those parents who partially fund the purchase of their children’s homes are loaning, on average, almost $90,000.
But does this level of assistance come with good reason?
Is the property market booming too fast for first home buyers to possibly be expected to enter the market on their own?
The average first home buyer deposit has crept up over $100,000 across the nation to $106,743, representing a dramatic increase of 16 per cent since January 2019. The highest average first home buyer deposit is in New South Wales, where an average of a $128,469 deposit is required, at the second-highest growth rate of 23 per cent since 2019, just behind the Australian Capital Territory at 24 per cent, as the market becomes seemingly unattainable for many first home buyers who dream of the day they own a place they can call their own.
Whilst there are still measures, such as the first home loan deposit scheme in place to give prospective home buyers a helping hand in the market, Sarah Megginson, Home Loans Expert at Finder, has said that “prospective buyers are being stumped by a supercharged property market, which isn’t showing any signs of slowing down just yet”. Further, stating, “low interest rates have made it cheaper to pay down a mortgage, but this has pushed up property prices, making it even harder to save for a deposit”.
The unparalleled capital growth spells great news for property investors who are set to be one of the stakeholder groups to gain most prominently from the property boom, however, the debate will continue to rage on between industry experts and economists alike, as to whether more help must be provided to those looking to enter the market for the first time. Is it possible to strike a balance where both investors and first home buyers can equally gain from such strong performance in the property market?
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WHY INVESTORS ARE NOW JOINING THE HOUSE PRICE PARTY
The country’s house price party is likely to heat up even further, with bankers reporting that property investors – who have long sat on the side-lines – are finally beginning to join in the festivities.
Until now, the boom in house prices has been a very patchy affair. There’s been a huge run-up in the prices of suburban houses – the preferred abode of owner-occupiers, who have taken advantage of ultra-low borrowing costs to upgrade their dwellings.
But the prices for inner city apartments, which tend to be favoured by investors, have languished.
And this has created a very unusual, two-speed house price boom. As one senior banker noted: “The market is hot in some places, and cold in others. In particular, inner city apartments aren’t going well at all.”
PROPERTIES ARE FLYING OFF THE MARKET AT RECORD SPEEDS
The real estate market typically slows down in winter, but there’s no sign of that happening this year.
REA Group Insights Housing Market Report, released today, found that properties are selling at record speeds, with the average time on market reaching 48 days in March 2021, down from 71 in June 2020.
Properties are selling the fastest in the Australian Capital Territory (25 days), New South Wales (27 days) and Victoria (30 days) over March 2021.
Australia’s property market has been booming due to a ‘perfect storm’ of historic low mortgage interest rates, a stronger than expected economic recovery, and strong buyer demand.
Anne Flaherty, realestate.com.au economist and author of the report said Australia’s property market shows no signs of slowing in 2021.
“The low cost of debt combined with an unprecedented level of government support has seen buyer activity surge this year,” she said.
MELBOURNE’S PROPERTY BOOM SPREADING TO SUNSHINE, TOOTGAROOK AND LAUNCHING PLACE
Melbourne’s property market boom is now spreading to once affordable outer suburbs.
Property sales are surging in Melbourne’s west with the prices of units in Sunshine soaring 47 per cent, making the median price $570,000.
People are also flocking to fringe suburbs to secure more land.
Prices in Launching Place, which is 54 kilometres east of Melbourne’s CBD, have jumped 21 per cent.
Suburbs on the Mornington Peninsula also continue to surge with Crib Point recording a 17 per cent increase and Tootgarook with a 19 per cent increase.
Bittern has seen a 14 per cent increase in property prices and Capel Sound is at 13 per cent more.
In the southeast, Lynbrook and Aintree have had a 13 per cent and 15 per cent price increase respectively and Wallan is a star performer in the north at 15 per cent.
“Instead of maybe two or three people at an auction bidding, at this stage at many of the properties that we’re seeing, we’re having five, six, seven people bidding,” Leah Calnan from REIV told 7NEWS.