Hi there, I'm Rose Jacobs, here with you for Kalkine Media. Today we’re exploring
why First-Time Homebuyers are Fuming At Australia’s Property Boom. Before we dive in,
make sure you hit that bell icon at the bottom of your screen for all the hottest updates.
Housing demand remained at an all-time high throughout the previous year, backed by record-low
interest rates. The rebounding demand has been fuelling property prices, leaving behind many
buyers struggling to enter the market. In fact, the property price boom has disproportionately
hurt first-time homebuyers instead of those who already have properties in possession. However,
banks have realised that first-time homeowners are facing greater affordability issues. Thus,
financial institutions are coming up with alternatives to mortgage lending. At the
same time, regulatory authorities are trying to address the issue of sky-high prices,
which has been forcing many young buyers out of the market. Thus, one can expect the real estate
market to transform in the coming months while easing affordability constraints for first-time
homebuyers. Amidst the ongoing price boom, the Real Estate Institute of
Australia is building favourable schemes for first-time buyers to protect their interests.
The REIA has recently called for an expansion of the First Home Loan Deposit Scheme,
which will allow more first-time buyers to access the deposit scheme. Additionally, the authority
has also asked for an expansion of the First Home Super Saver Scheme. A growing concern pointed out
by the REIA is that fewer loans are being lent out to first-home buyers. The recent CoreLogic
data suggests a sharp decline of 21.5% in the number of new loans to first-time homebuyers
throughout 2021 relative to the previous year. While the dip in new loans may have cooled off
some demand-side pressure, this cooldown has been attained at the cost of first-time buyers
exiting out of the market. Options emerging for first-time buyers... First-time buyers
now have an alternative to opting for a hefty home loan from the banks. The Commonwealth Bank
of Australia (ASX: CBA) has lately announced its investment in OwnHome, which allows buyers to rent
and save for their first home without traditional mortgage deposit requirements. This seems to be a
much more efficient solution than waiting for years before securing a loan from the banks.
At the same time, buyers continue to have an option of securing a traditional home loan from
several lenders with a deposit of as small as 5% of the property value. However, this would
mean that the buyers will also have to cover the higher cost of the Lender’s Mortgage Insurance.
Buyers should carefully investigate such options before availing them. Thus, the current
environment could be considered a sweet spot as the property price growth has just begun to show
a slowdown. Though prices have been surging, the rate of increase has been slower amidst increased
supply and waning demand. The slower rise in prices combined with record-low interest rates is
a scenario unlikely to be replicated in the coming years. The Bottom Line? First-time buyers have
been facing precarious circumstances ever since interest rates reduced during the pandemic. With
an increased focus on developing the real estate sector, the government has rolled out grants
and schemes favouring first-time buyers. However, the full effects of such policies are yet to be
realised as the property markets are still largely unexplored by first-time buyers. So, watch this
space! And that’s a wrap for now. But please check out the website for more kalkinemedia.com and
make sure you like, comment and subscribe to the channel. I’m Rose Jacobs, thanks for joining me.