First time buyers leapt to the highest level on record in Australia during last year, with 191,000 taking their first step on the property ladder, new research shows.
Last year saw almost 70,000 more first time buyers pile into the market than in 2008, a 55% leap, according to figures from property research firm RP Data.
The jump is directly due to a doubling of the first home buyers grant to $14,000 for existing dwellings and increasing the handout to $21,000 for new dwellings but has now been phased out. It was introduced in October 2008 to boost Australia’s real estate market during the global financial crisis and has been hailed a huge success.
Interest rates at their lowest levels for 49 years also helped stimulate demand but they are now rising again.
‘During 2009, owner occupiers took out finance for approximately 739,000 dwellings, of which 26% was taken out by first home buyers and the remaining 74% came from non first home buyers,’ said Cameron Kusher of RP Data .
‘It” no real surprise that first home buyers were so active during 2009 given that the government was offering the First Home Owners Grant Boost,’ he added.
Western Australia was the most popular state for first home buyers last year. State government incentives of low or no stamp duty also boosted the market, as did a softening in property values during 2008.
Kusher said that between 1992 and 2009 there was an average of just over 116,000 first home buyers annually. ‘Not only was the level of activity during 2009 the highest on record, it was 64% greater than the long term average level of activity,’ he explained.
During December last year, after the first home buyers grant had been reduced, first home buyers made up 21% of the owner occupier market, just 1% higher than the historical average.
‘We would expect that during 2010 they will sit at a similar, if not lower, level than the historical average. By anticipating that first home buyers will at least fall back to historic average levels during 2010, we expect to see a turnaround in rental markets, with higher rents throughout the year, and expect that with less competition, investors will become more active in the marketplace,’ Kusher explained further.
On a state-by-state basis, the second greatest proportion of home loans for first home buyers was found in Victoria, 26.9%, followed by New South Wales at 26.8%. The markets that had the lowest proportion of first home buyers during 2009 were South Australia at 20.6%, Northern Territory at 21.1% and the ACT at 22%.