First Home Buyers Make One Last Grab for Grant

By Catherine Cashmore on 1 Jul 2013
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First home buyers make one last grab for grant

 

 

 

 

 

 

 

 

 

RP Data have released details of their daily house price index for June. 

As expected – and as I voiced a few weeks ago when all noticeable indicators from an anecdotal perspective were pointing toward continued stability and if anything, further climbs – the monthly index for June has reversed the fall in May. There was a 1.9 per cent lift across the five aggregated capital cities.

According to RP Data, Melbourne house prices increased 2.3 per cent over the month, though they still remain – 0.4 per cent down for the quarter. Year on year however, we’re in positive territory due to a 3.4 per cent lift. RP Data recorded Melbourne’s median dwelling price as $512,000.

This weekend produced another round of strong auction results. The 73 per cent clearance rate was no doubt buoyed by a proportion of first home buyers trying to take advantage of the $7000 grant for established housing which is due to end today.   

For those who did manage to purchase, a settlement date on or after July 1 also offers them the advantage of a 40 per cent saving in stamp duty, while a settlement date prior to July 1 only gives a 30 per cent saving for this demographic. You can see how alluring the double dip bonus must have been.

From the auctions I attended, competition was strong.  Most first home buyers have a budget of around $300,000 and it was clear from the numbers bidding, which comprised of at least 3 individuals at each auction I attended, that the $7000  grant would have been burnt through quickly in an attempt to outbid the competition.

Once again, it shows the futility of first home buyer grants as a savings mechanism, and further establishes the fact that the more money you pump into the market, the higher house and unit prices inevitably become.

As most are aware, Australia has now ticked past 23 million on the population clock.  Coming from the UK, where there are over 60 million individuals in an area of land that fits into Australia some 58 times over, the 4.25 million share of the populace residing in Melbourne city and the surrounding sprawl feels perceptibly different. 

Victoria has exceeded all states in the population stakes. According to the ABS, over the year to 2012 we welcomed an additional 99,548 new residents. Of that number, 56.4 per cent were overseas migrants, 41.8 per cent were births, and 1.7 per cent were interstate migrants.

When it comes to interstate migration, Queensland sits on top of the tree. Western Australia recorded the fastest rate of population growth, with a 3.5 per cent rise over the course of 2012. 

Western Australia houses 10 per cent of Australia’s population. However, over the past two years the state has taken the lion’s share of our nation’s jobs growth, primarily due to the mining boom which has now plateaued.

It’s for this reason that Western Australia (along with NSW) is exceeding the five year average in housing turnover (number of sales).

Nationally, we’re still 8.8 per cent below the five year average. Melbourne sits some 15 per cent below the five year average. 

Despite the price rises in the inner and middle suburban rings, and to some extent the outer suburban rings, we have some way to go before we can hail a full recovery.

All of the above data is useful from a macro perspective, though for investors, it’s the micro data that counts. 

Without a good understanding of recent local sales, local turnover suburb by suburb, current properties on the market and properties coming onto the market, as well as a comprehensive knowledge of the predominant local buyer demographic shopping in the area, it’s impossible to assess a purchase adequately.

In this respect, it would pay dividends to enlist the help of someone experienced in the field of property acquisition and local market analysis prior to making any attempts to do so.

About the Author

Catherine Cashmore is a regular journalist, blogger and well-known media commentator for all things property.

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