According to Real Estate Institute of Australia’s president Peter Bushby, “The ACT remained the most affordable state or territory in which to buy a home, largely due to the high average income and NSW remained the least affordable." ; First home buyers in Victoria also face a number of challenges, including surging property prices, rising property and water charges, and changes to government policy.
“Following the changes to the First Home Owner Grant introduced by the Victorian government, which skew assistance away from existing dwellings (the clear preference of first home buyers), that state continued to show a fall in the number of first home buyers, down by 22.7% over the quarter and 28.1% for the year.” said Bushby in a statement about the latest Adelaide Bank/REIA Housing Affordability Report.
First home buyers will continue to face challenges in 2014, with property prices rising faster than income and competition fierce in major city markets. ; According to a global housing and mortgage report by ratings agency Fitch, Australian home-owners are expected to experience 4 percent property gains in 2014, with prices tipped to rise a further 4-5 percent in 2015. ;
In figures from the REIA Housing Affordability report, the proportion of income required to meet loan repayments also increased 1.0 percentage point over the December quarter to 30.8 percent. ; With prices set to rise more over the next couple of years, and some analysts forecasting an interest rate rise in the later half of 2014, first home buyer levels will remain a key challenge for the Australian market.
It's not all bad news for first home buyers, however, with some analysts forecasting signs of a resurgence in 2014. ; National real estate group LJ Hooker estimate that 110,300 first-home buyers will enter the market this year, up from 90,551 last year. ; If these forecasts are correct, Victoria should have 30,000 new first home buyers and NSW 26,000.
In other good news for prospective first home buyers, rental affordability improved in the last quarter. ; “Rental affordability improved in Victoria, Queensland, South Australia, Western Australia, the Northern Territory and the ACT but worsened in NSW and Tasmania with the proportion of median income required to meet average rent rising 0.3 and 0.9 percentage points respectively.” said Bushby.