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Exceptional affordability for first home buyers
There has been a lot of talk in the media recently by so called experts claiming that the Sydney real estate market is just too expensive for first-home buyers and that ‘if you have not staked your spot in the Sydney housing market by now, you will never own a home here in your lifetime’.
The good news is that these outrageous suggestions are entirely untrue.
President of the Real Estate Institute of NSW, Mrs Cristine Castle says it is a simple fact that there has seldom been a better time for first-home buyers to enter the Sydney market.
“Housing prices in Sydney have eased over the past two years; interest rates have been historically low and stable for a decade; unemployment is a reasonable 5.7 percent; the Federal and State government are providing support in the form of grants and stamp duty exemptions; and for better or for worse competition between banks and lending institutions has spawned a range of ‘low doc’ and ‘no deposit’ home loans,” Mrs Castle said.
“In fact the affordability of Sydney, compared with other capital cities, is at its best since 1993.”
According to the Reserve Bank’s February Statement on Monetary Policy ‘The price falls that have occurred in Sydney, together with stable or increasing prices in other capitals, have brought price relatives between Sydney and the other capitals back to the pre-boom levels of the early to mid 1990’s’.
But this window of exceptional affordability for all home buyers, not just first-home buyers, won’t last for long and many first-home buyers know it.
According to the Australian Bureau of Statistics the percentage of first-home buyers in the NSW marketplace is approaching 20%, which is the highest proportion since May 2002 and housing finance to first-home buyers is also at its highest since May 2002.
“However, this window of affordability is slowly closing. The real experts in Sydney real estate agree that the housing market cycle is likely to reach its bottom within the next 6 months, Mrs Castle said.
“Median house prices experienced a slight rise in the December quarter of 2005, which is the first such rise in a year and a fall in new building approvals recorded by the ABS further suggests that the supply of houses will tighten and prices will firm later this year,” Mrs Castle said.
First-home buyers have always invested in less expensive suburbs and at the moment median house prices in Campbelltown, Penrith, Wollondilly and Blacktown are in the range of $308,000 to $350,000.
Of course home units are even more affordable and often more practical for first-home buyers and in many parts of Sydney units are in oversupply but fewer units in the building pipeline and renewed interest from residential property investors means that the unit market will also firm later in the year.
At the moment median unit prices in Campbelltown, Fairfield, Canterbury and Penrith are between $220,000 and $260,000.
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