Have you ever fumbled in the dark for a spare key only to find out there isn’t one?
According to Federal Budget 2015 analysis by property strategist, Michael Yardney, a growing number of Australia’s would-be first home buyers are bound to find themselves in this position in the short term.
He argues that the flipside of some positive moves for the real estate sector in this week’s federal budget will raise the bar for newcomers even higher than it already is.
As conveyancers, we have seen some evidence of Michael’s assertions and noticed the knock on effects for all property owners.
First home buyers knocking but they won’t get in
In his article, Federal Budget 2015: What it means for property, Michael Yardney expresses dismay that the Federal Budget makes almost no mention of property and almost ‘ignored’ residential real estate.
He argues this is puzzling because, ‘the budget acknowledges that property is probably going to be one of the few industries that is going to prop up the economy for a while.’
Despite the lack of specific real estate measures in the budget, he notes there will be stimulus flowing from recent interest rate cuts and some of the budget measures themselves, leading to a tougher environment for first home buyers who will face higher prices and more competition from established property investors.
We all feel the pain when first home buyers are locked out of real estate
Michael Yardney is right to shine the spotlight on the plight of first home buyers because they are crucially important to property market overall.
If there aren’t many first home buyers in the market it can hold back home owners who are wishing to upgrade to bigger, more expensive homes because there’ll be less demand for their lower end properties; the very type first home buyers are more likely to purchase.
At the moment first homes buyers are almost non-existent in the South Australian market in our experience.
In my opinion this is reducing overall demand, meaning properties are typically staying on the market longer and/or possibly selling for less while lower end properties are being bought by investors benefiting from low interest rates.
It does appear first home buyers will need to endure an enormous challenge to enter the residential real estate market in the near future.
But, as Yardney concludes, it is a struggle worth pursuing because budget signals regarding the future of pensions tell us real estate and shares remain as crucial as ever to the financial security and future prosperity of individual Australians.