Housing, real estate industries back call for first-home buyers to enter property market

The housing and real estate industries have backed Michael Sukkar’s call for first-home buyers to snap up a property now if they can.

Housing Minister Michael Sukkar has urged first-home buyers to take a chance on the property market. Picture: AAP

The housing and real estate industries have backed Michael Sukkar’s call for first-home buyers to snap up a property now if they can, saying housing affordability is “extremely favourable”, as Labor attacked the new Housing Minister for “acting like real estate agents”.

Mr Sukkar said it was worth getting a foot in the market “if you’ve got an opportunity” before the Morrison government’s First Home Loan Deposit Scheme takes effect on January 1, because he believed the market was starting to improve.

“Peopl­e who buy now, I don’t think will regret it at all,” Mr Sukkar told The Australian.

Graham Wolfe, managing director of the Housing Industry Association, said Mr Sukkar was simply stating “what is the environment at the moment”.

“There are green shoots, it is a very affordable time to be looking to buy your first home. With the government scheme coming on board in January, (Mr Sukkar’s) looking forward to more first home buyers getting into the market sooner,” Mr Wolfe said.

“It’s not giving advice, it’s just explaining this is the environment they are now looking at rather than what it might have been looking like in the last 12-18 months and sitting on the sideline. If you’re renting or living with your mum and dad, it’s a good time to look outside.

“All those prospective first home buyers who have been delaying getting into the marketplace can now have confidence housing affordability is extremely favourable and the best it’s been for many years.”

HIA’s chief economist Tim Reardon said housing affordability was where it was 20 years ago.

“The medium house price has increased by 230 per cent over that time and average earnings have increased by only half that much but because interests rates, which is the cost of serving that loan, have come down so much in that timeframe returns of affordability or the ability to service a mortgage is back to where it was in 1999,” he said.

“That doesn’t mean the issue of housing affordability is over, 1999 is not a good starting point for that either, but it does mean that for a person buying a home now serviceability is better than is has been for 20 years.”

Mr Clare, Labor’s housing spokesman, warned interest rates were at “crisis levels” and it was important first home buyers purchase houses with all the best information possible.

“The comments by the new Housing Minister Michael Sukkar encouraging people to get into the housing market and buy a house — ‘you won’t regret it’, I think they were his words — are words he should reflect upon,” Mr Clare said.

“We’ve got to be a bit careful here. We shouldn’t have ministers of the crown acting like real estate agents or property speculators telling people to get into the market.

“We want more Australians to buy their own home but we want to make sure that all Australians don’t get in over their head and don’t get a loan that they won’t be able to repay at some point down the track when interest rates go back up.”

Real Estate Institute of Australia president Adrian Kelly said there’d been high levels of inquiry since the election and housing finance figures had shown some markets were reaching the bottom of the cycle.

“In that sense the Minister’s comments are reasonable and young people in particular should always be looking to buy real estate as part of their long-term retirement plan. I understand the difficulties for first home buyers, particularly if they’re in the rental cycle, that’s been well publicised,” he said.

“So long as anybody who buys a property does their research properly then it’s a good time to buy.”

Economists and real estate agents have attributed more confidence in the housing market in part to the Morrison government winning the election, which ensured Labor’s controversial housing policies were not in play.

Labor had proposed limiting negative gearing to new dwellings, though the policy was grandfathered, and to halve the capital gains tax discount.

“As Jim Chalmers and Anthony Albanese have said, when it comes to the policies that we took to the last election, it’s a clean slate, we start again,” Mr Clare said.

“The policies we took to the last election, don’t expect we would take them to the next election in the same form.”

He would not say if he thought the policies should be modified or scrapped altogether.

Under the government’s deposit scheme, eligible first-home buyers with a deposit of at least 5 per cent will be able to ask the government to act as guarantor for the remaining 15 per cent of the deposit, and can avoid paying thousands of dollars in lenders mortgage insurance. Singles earning up to $125,000 and couples with a combined income­ of $200,000 or less will qualify.

While it is limited to 10,000 borrowers, Mr Sukkar did not rule out expanding the program and said he hoped that was a conversation the government would need to have, “because it’ll mean the scheme has turned out to be a success and there’s something there’s been a lot of demand for”.

Mr Clare confirmed Labor would support the scheme, effectively guaranteeing its passage through the parliament, but wanted to see the fine print when the legislation was presented in the spring sittings.

The latest Australian Bureau of Statistics figures revealed the number of Australians renting had increased from 27 per cent in 1997-98 to 32 per cent in 2017-18, while the proportion of people who owned their own home had fallen from 70 per cent to 66 per cent in the same timeframe.