First-Home Buyers Sidelined by Investors in Australia

Discover why first-home buyers are being sidelined by investors in Australia and the impact on the housing market. Expert analysis and insights provided.

First-homebuyers across Australia are facing tough challenges as they navigate the current property market. With high interest rates, negative real wage growth, and record-high property prices, it has become increasingly difficult for individuals to gather enough funds for a deposit. According to the Australian Bureau of Statistics, one in five new loan commitments were made by first-homebuyers in March, a share that has remained steady for over two years but has decreased from its peak of 30% in January 2021.

First-Home Buyers Sidelined by Investors in Australia - Expert Analysis

The national share of new loans to first-homebuyers may have held steady, but there are notable differences by state. Victoria and the ACT saw the highest share of new loan commitments to first-homebuyers in March, while Queensland and South Australia had less than 20% of new loans going to first-homebuyers. Western Australia experienced the most significant decline in the share of purchases by first-homebuyers, dropping from 40% in January 2021 to 23% in March, with rising investor activity filling the gap.

In Western Australia, the surge in investor activity has likely contributed to the decrease in first-homebuyers activity. Perth, the best performing capital city in Australia, has seen a 20.2% increase in median home prices over the past year, making it one of the most affordable capitals despite the growth. Renting in Western Australia is notably more expensive compared to other states, with Greater Perth experiencing the strongest rent growth in the country.

On the other hand, conditions are more favorable for first-homebuyers in Victoria, particularly in Greater Melbourne, where price growth has been the weakest among capital cities since the pandemic. Despite the challenges, there is a growing interest among first-homebuyers to enter the property market, possibly driven by the shortage of rental accommodation and rising rent costs.

As property prices continue to rise and the cost of living crisis persists, first-homebuyers may find themselves having to compromise on their ideal locations and property sizes. The current market conditions present a challenging landscape for those looking to make their first step onto the property ladder.

The disparity in first-homebuyers activity across states reflects the varying market conditions and challenges faced by individuals trying to enter the property market. While some regions may offer more favorable conditions for first-homebuyers, the overall trend of rising property prices and living costs presents a significant hurdle for those looking to purchase their first home.