Are first home buyers being squeezed out of the property market?
It wasn’t so long ago that first home buyers ruled the property market. Back in 2008, interest rates were relatively low (similar to what they are today), the First Home Owners Grant was up to $21,000, and first home buyers enjoyed stamp duty exemptions and concessions on a wider range of residential properties – not just new homes, as it is today.
At that time, the residential property market was supported largely by first home buyers. In fact, there were so many first home buyers, it was common for the eventual selling price to be above the asking price because of their demand. It seemed that many first home buyers thought that the first home benefits added to their ability offer and unfortunately, resulting property purchase prices that were sometimes difficult to justify. On the tail end of the global financial crisis, banks were often reluctant to meet the valuations – first home buyers were just offering too much.
These days the property market appears to be filled with investors looking to capitalise on the relatively low interest rates and high rents, not first home buyers. I think this trend is going to stay since interest rates are predicted to drop even further and stay low for the short term and Sydney’s housing pressures continue.
So where have all the first home buyers gone?
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Director – Property Lawyer