First-time homebuyers look to jump rental ship

Soaring rental prices have spurred more Australians to consider homeownership, with rising rates and cost-of-living pressure failing to dampen first-home buyer numbers.

First homebuyer numbers are rising, ABS figures show.

The desire to exit the tight rental market helped to drive a rise in Australians opting to become homeowners last year.

Cost-of-living pressure and ­increasing interest rates slashed the amount buyers could borrow by about a third, but the number of first-home buyers rose by 20.3 per cent over the year to ­November 2023, the latest ­Australian Bureau of Statistics data shows.

First-time purchasers are also borrowing more to keep up with rising property prices, now taking on an average mortgage of $505,000, a near record high.

Melbourne-based buyers agent Cate Bakos said many young people were becoming sick of renting and, with secure employment and occasional help from the Bank of Mum and Dad, were able to get on to the property ladder.

“The dominant reason is they are not enjoying being renters,” Ms Bakos said.

“They are looking at it and ­saying, if I can do anything to get into the market and avoid getting kicked out of my rental and dealing with consistent rent hikes, than I’ll do so.”

Rental conditions have been chronically tight for several years. While recent data from housing researcher PropTrack has shown a loosening of the rental vacancy rate to 1.2 per cent nationally, weekly rents in Australia rose 11.5 per cent through 2023 to a ­median of $580 each week.

The number of first-home buyers across the country is ­considerably lower than in 2021 when activity peaked due to ­access to cheap money.  

In November, the biggest ­increase in first-home-buyer ­activity was seen in Queensland, up 10.8 per cent on the previous month, and the ACT, up 14.2 per cent. Western Australian numbers were up 4.7 per cent on the previous month, as they were in South Australia (up 3.5 per cent) and Victoria (up 1.2 per cent).

But in Tasmania, where property prices are still falling, there was a considerable drop in market entrants, down a whopping 34.1 per cent in November on the previous month.

NSW and the Northern Territory also declined, down 4.8 per cent and 1.4 per cent respectively.

Buyer's agent Cate Bakos.

Real Estate Institute of Australia president Leanne Pilkington.

Real Estate Institute of Australia president Leanne Pilkington said governments should be doing more.

The Queensland peak real estate body, the REIQ, last week called for the stamp duty concession in the state to be lifted for the first time in over a decade in response to soaring property prices, as was the case in NSW.

“It is great most of the states have got stamp duty concessions of one type or another, but the buffers at which they check out are too low in most places,” Ms Pilkington said.

Ms Bakos said the federal ­government’s First Home Guarantee, which facilitates the purchase of a home with a 5 per cent deposit, remains popular with market entrants.

The federal government will look to help boost the availability of social and affordable homes from Monday, when applications open for the first round of funding from the $10bn Housing Australia Future Fund and the National Housing Accord to help fund the construction of properties 40,000 properties.