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FEBRUARY 2010A Dream Delayed: First-Home Buyers Get Older Less Is More - Property Ads That Work Download Newsletter Newsletter Archive
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Cnr. Macquarie & Cobra Sts
Dubbo NSW 2830
TEL: (02) 6882 1755
Fax: (02) 6884 2229
marketing@rhdubbo.com.au
First-home buyers are getting older as rising home prices and the run-away real estate market sour the dream of home ownership.
A Housing Industry Association analysis of Australian Bureau of Statistics data shows that in 2008 - the last year for which the figures are available - precisely two-thirds of first-home buyers were under 35.
Yet just seven years earlier, 75.5 per cent of first-home buyers were under 35.
Over the same period, the share of first-home buyers aged 45 of more edged up from 5.6 per cent to 6.7 per cent.
"Strong growth in house prices has meant that First Home Buyers are effectively forced to delay the purchase decision until later in life," HIA senior economist Ben Phillips said.
Although the Federal Government's First Home Owners Grant Boost last year is expected to temporarily slow or even reverse that trend when 2009 data become available, the long-term trend is likely to remain intact, the HIA said.
The findings reflect the ever-rising price of homes, which have risen almost continually since 1986. The median outstanding debt on Australian house was $400,000 in 2008, well above the $150,000 median debt recorded in 1994, as a combination of migration, minimal new home construction and delays in planning approvals eat into the available housing stock and drive up prices.
State by state
In Sydney, the proportion of under-35 home-buyers fell to 58.5 per cent in 2008 - from 80 per cent in 2001. The share of over-45 year-olds becoming first-time buyers ticked up to 10.7 per cent from 8.9 per cent.
Melbourne bucked the trend, thanks in part to the mixture of the city's growing immigrant population finding newly built homes in the outer suburbs.
First-home buyers aged under 35 rose to 75.4 per cent in 2008 from 67.1 per cent in 2001, the data show, while those in the 35-45 age range dropped from 26.6 per cent to 14.8 per cent in the same period.
Those over 45 increased to 9.8 per cent in 2008 from 6.3 per cent.
In Perth, the proportion of young home buyers dropped over the 2001-08 period, hitting 69.4 per cent in 2008 from 73.3 per cent in 2001, while buyers between 35 and 45 rose to 24.7 per cent from 15.3 per cent.
Haves and have-nots
Nationally, the lower proportion of younger first-home buyers shows the emergence of what Mr Phillips called the "housing haves and the housing have-nots".
With relatively low unemployment and a strong economic outlook, rising home prices don't present a problem for many Australians who are already paying off mortgages. Those people have sufficient capital to allow some housing market mobility within a few years.
"If you're an existing home owner, you're not impacted by house prices increases," Mr Phillips said, noting that price rises improve the equity position of homeowners - what they own is effectively worth more - but doesn't increase the cost of their housing.
The real hurdle, he said, was for those struggling to get into the market.
"In the big picture, for households who get into housing, their wealth position down the track is vastly better than those who have to rent," he said.
Those with mortgages have "forced savings", more financial stability and often live in more stable communities - that is, among other home owners, Mr Phillips said.
In a speech delivered in November, RBA deputy governor Ric Battellino said older Australians were better able to sustain a high price-to-income ratio than younger households.
"Many 50–60 year olds, having benefited from the prolonged economic expansion over almost 20 years and the accumulation of superannuation savings, are in a strong financial position," he said.
"In contrast, the typical first-home owner cohort – those under 35 years of age – has experienced a noticeable decline in home ownership over the past 10–15 years," he said.
Chris Zappone - Sydney Morning Herald
The start of 2010 has seen a stabilising in values in the low and mid cost markets which was dominated by first home buyers throughout 2009. The increased first Home Owners Grant had the effect of increasing sales volumes and value levels during 2009, however now that the grant has reduced, prices and sales volumes are beginning to return to normal levels. We would expect value levels to remain stable for the first part of 2010.
Demand for vacant residential land has also slowed after a period of strong demand in 2009 as a result of the increased first Home Owners Grant for new housing construction. However value levels have remained steady due to the volume of residential allotments currently on the market. Dubbo City Council are also planning the release of Stage 5 (50 lots) of Keswick estate, however a release date has not been set.
Demand for small acreage properties in and around Dubbo has also increased over the last 6 months, with areas such as Richmond and Firgrove estates seeing an increase in sale volumes and prices. With interest rates predicted to increase throughout 2010, these prices are likely to stabilise in the next 6 months.
The high cost market has not seen the increases experienced by the low and mid cost sectors in 2009. Demand and sale prices have increased slightly in the past 6 months, however most properties are still requiring extended selling periods. Sale volumes and price are expected to remain for the first part of 2010.
With interest rates expected to increase throughout 2010, we are likely to see a softening in the Dubbo market across all sectors toward the end of the year. This could also mean an increase in demand for rental accommodation, with prospective buyers unable to afford mortgage repayments coupled with tightening lending policies. An increase in demand for rental accommodation could see more investors returning to the marketplace. We will have to wait and see what 2010 has in store!
Herron Todd White - February 2010 Month In Review
Many people feel that real estate ads often exaggerate the features of the properties advertised. Yet agents frequently report that when it's their turn to sell, many vendors just can't help wanting to ‘oversell' their property by insisting that every feature of their home is highlighted in every ad, or by insisting on ‘four bedrooms' rather than ‘three bedrooms and a study'. But what does a real estate ad really need to achieve?
There's an important distinction that needs to be made: the ad is not the property. Furthermore it won't sell the property by itself. A real estate ad has done its job if it makes people want to come and carry out an inspection. Then it's up to the property to live up to the description if a sale is to be made. If purchasers feel disappointment that the property does not live up to expectation, they are unlikely to make an offer.
As such it is better to claim less for the property rather than more. Underselling works better than overselling. There should be a build up of desire and excitement that reaches its peak by the time people set foot in the property. Purchasers should be delighted to find that the property is everything the ad said it was – and more. Purchasers are frequently buying a lifestyle and rather than listing all the features of the property, it is more effective to evoke the kind of life they might be able to live as owners of, and dwellers in, this particular home.
Secondly, too much information can actually make people decide not to inspect the property at all. To the inexperienced, this seems an unlikely situation. How could an ad that highlights the property's desirability actually go against it in the long run? They don't realise that potential purchasers may decide without seeing the house that it would not suit them. Some vendors think that purchasers who have already made up their minds against their property weren't ever going to buy the property anyway, so it's a good job they didn't waste everyone's time on an inspection. This approach is a short-sighted one, however, as it overlooks the very real potential for the house to sell to someone who falls in love with it even though it doesn't outwardly meet all the criteria on their wish list, or had a feature they had decided they didn't want.
Remember, most purchasers have to compromise on some features, and the home may meet their needs so well in some particular way that is special to them that they overlook the glaring lack or supply of something else they thought they needed.
www.localpropertynews.net
www.amusingfacts.com
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DISCLAIMER: This newsletter is provided as an information service only without assuming any responsibility. It contains general information only and should not be relied upon as a substitute for professional advice. The information is liable to change at any time without notice. Interested parties should rely on their own enquiries.
cnr Macquarie & Cobra Sts, Dubbo, NSW 2830
T: (02) 6882 1755 | F: (02) 6884 2229
Email: marketing@rhdubbo.com.au
© Raine & Horne Dubbo 2005
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