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REINSW Response to “Debt Sentence”
Your story “Debt Sentence” suggesting that “experts believe 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” was outrageous and fortunately entirely untrue.
The simple fact is 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.
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 opportunity 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.
But real experts in real estate in Sydney agree that the housing market cycle is likely to reach its bottom within the next 6 months.
Median house prices experienced a slight rise in the December quarter 2005, which is the first such rise since the same quarter in 2004 and the fall in building approvals recorded by the ABS further suggests that there will be a tightening in the supply of houses which should firm prices later in the year.
Of course another option for first-home buyers is to purchase a home unit, which are even more affordable.
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.
Which brings me to the story’s other major flaw. It is ludicrous to base affordability assumptions on Sydney’s median house price of $518,000. Since when have first-home buyers targeted suburbs such as Mosman, Woollahra, Hunters Hill and Manly which are included in the median?
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 and median unit prices in Campbelltown, Fairfield, Canterbury and Penrith are between $220,000 and $260,000.
So apart from terrifying first-home buyers and causing their parents to choke over their cereal, my sincere hope is that this sensational story hasn’t done any permanent damage and that first-home buyers will continue to take advantage of the current favourable conditions to make one of the most important investment decisions of their lives.
Yours sincerely,
Mrs Cristine Castle
REINSW President
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