Have first-home buyers and ordinary Victorians fallen behind in the property and housing market? And with COVID-19 having changed lives, real estate reality bites. Or so it seems.
According to reports, soaring rental and housing prices are making the dream of owning property even more elusive. Richard Denniss, the Australia Institute chief economist, has called this an “enormous challenge”, highlighting the tax concessions offered to investors.
“No one should be surprised that investors who are bidding up the price of houses are substantially increasing the rents they’re charging. That’s the plan,” he was quoted as saying in The Age.
There are many federal and state government schemes and initiatives announced. More recently, the First Home Loan Deposit Scheme and the New Home Guarantee introduced by the Federal government allow first home buyers to put down as little as 5 per cent deposit, instead of the usual 20 per cent, with the government going guarantor for the loans.
Further, the National Housing Finance and Investment Corporation (NHFIC) states that the Federal Government is issuing 4,651 additional guarantees to support first home buyers who haven’t had an opportunity to purchase their first home, including because of COVID disruptions. These scheme places have been made available from January 31, 2022.
But critics opine that such schemes only further inflate the property market in any event. They believe that governments must find the will to improve affordable rental schemes and public housing and end the tax breaks that benefit the privileged.
According to the Australian Bureau of Statistics (ABS), new loan commitments have risen to 2.6 per cent for housing in January 2022 in seasonally adjusted terms. So, while these schemes have seen large numbers of first-timers enter the market, the first home buyer activity is slowing as prices continue to rise.
But is this recent bounce just a blip?
According to CoreLogic, property prices across Australia have soared during the pandemic, with Sydney’s median house price rising 29 per cent over the past year to sit above $1.3 million, and Melbourne’s rising 18 per cent $962,000.
An analysis by NHFIC, which looked at both first-home purchase and rental affordability around Australia, reveals that three in four properties in Sydney and one in two in Melbourne are only affordable for the highest-earning 20 per cent of first home buyers. The analysis also categorises first home buyers as people aged between 24 to 39 who are currently renting.
The other worrying factor remains: investors rushing in to crowd the first home buyers section against the backdrop of the government schemes. If it is of any consolation, Housing Industry Association economist Tom Devitt has said investors account for a “relatively modest” 33 per cent of total lending compared to 46 per cent six years ago and that “investor activity does not warrant a return to punitive restrictions on investors”.
What other factors influence the first-home buyers’ market remain to be seen. For those wishing to climb the property ladder, there is a step-by-step information on buying your first home in Victoria and where the government can help (https://www.vic.gov.au/first-home-buyer-guide).
Follow The Indian Sun on Twitter | Instagram | Facebook
Have #firsthomebuyers & ordinary Victorians fallen behind in the #property & #housing market? And with COVID-19 having changed lives, #realestate reality bites. Or so it seems. #TheIndianSun #Propertyscape🏡https://t.co/pILikhnfwo
— The Indian Sun (@The_Indian_Sun) March 14, 2022
Donate To The Indian Sun
Dear Reader,The Indian Sun is an independent organisation committed to community journalism. We have, through the years, been able to reach a wide audience especially with the growth of social media, where we also have a strong presence. With platforms such as YouTube videos, we have been able to engage in different forms of storytelling. However, the past few years, like many media organisations around the world, it has not been an easy path. We have a greater challenge. We believe community journalism is very important for a multicultural country like Australia. We’re not able to do everything, but we aim for some of the most interesting stories and journalism of quality. We call upon readers like you to support us and make any contribution. Do make a DONATION NOW so we can continue with the volume and quality journalism that we are able to practice.
Thank you for your support.
Best wishes,
Team The Indian Sun
