First-home buyers flooding back

Greater affordability and a lift in first-home buyer activity has spurred a 38 per cent leap in the level of inquiry at Mirvac.

Mirvac head of residential Stuart Penklis

Greater affordability and a lift in first-home buyer activity spurred a 38 per cent leap in the level of inquiry in Mirvac projects in the wake of the first two Reserve Bank cuts.

The share of first-home buyers in Mirvac developments has risen in the wake of the interest rate cuts and prudential loosening.

A third cut in October brought the cash rate down to a historic low of 0.75 per cent. These cuts, combined with cheaper access to credit after APRA repealed some restrictions on bank lending, has driven the 38 per cent spike in year-on-year inquiries in the four months from July to October.

Mirvac’s head of residential, Stuart Penklis, told The Australian the new crop of buyers was more confident in the market and well informed about financing ­capacity.

“What we’re seeing with first-time buyers is that consumer sentiment is really starting to improve in that segment of the market,” Mr Penklis said.

“There’s more confidence and we’re starting to see that occur, not just in terms of the foot traffic walking into display centres, we’re seeing better conversion of those purchases.

“The good thing were seeing with first-time buyers is they’re actually very well informed and prepared. They are walking into display centres having undertaken their research and have an understanding of their borrowing capacity and are ready to move forward with a purchase.”

Renewed confidence in the property market as a whole has seen prices surge since the downturn petered out in June.

Sydney and Melbourne reported 1.7 per cent and 2.3 per cent growth respectively.

The stronger market would likely see purchase incentives like furniture and appliance packages and holiday vouchers largely disappear, particularly in terms of house-and-land packages.

Mr Penklis said that because there was such limited housing supply coming on in the next few years in core markets, coupled with continued strong population growth, “we are going to see a strengthening in pricing”.

“Any incentives in these markets will probably be wound back because demand will start to outstrip supply,” he said.

However, the off-the-plan apartment segment of the housing market was still feeling the impact of poor publicity following the defects in Opal Tower and Mascot Towers in Sydney, where homeowners are still homeless after cracks appeared in the walls as the buildings shifted.

Mirvac is looking for opportunities to invest in new development sites to restock its pipeline, which it has been working through over the past few years following a flurry of buying ­activity before the previouscycle.