First home buyer intentions are not expected to fall to the same extent as they did following the expiration of the First Home Buyer Boost Scheme in 2002.
QBE Lenders Mortgage Insurance (QBE LMI) has released its latest ImiMORTGAGE UPDATE (researched by BIS Shrapnel) which reports first home buyer attitudes and activity.
The report anticipates loans approved to first home buyers to be relatively strong at 110,000 to 115,000 in 2010; this is a healthy 27 percent above the low point of loans to first home buyers in 2003/04.
This is the first quarter following the withdrawal of the First Home Owner Grant Boost Scheme (FHOGBS) as well as a number of interest rate increases that first home buyers have had to deal with. Not surprisingly, this has had a short-term impact on demand in the market. This was expected, given that many first home buyers brought forward their intentions to enter the housing market in 2009, Ian Graham, CEO of QBE LMI, said.
The research shows strong population growth in the first home buyer age cohort (25 to 39 year-olds) totaling 3.2 percent over the three years to June 2012. The solid growth in this age group will result in a bigger pool of first home buyers in the market which will support demand in the future.
Interestingly, the research also confirms first home buyers are adjusting their expectations by turning to established or smaller dwellings, such as townhouses and apartments. This reflects pressure on affordability following the expiration of the FHOGBS and higher interest rates on mortgages.
Forecast rental increases will also be a factor in driving first home buyer demand. the move from renting to paying off a mortgage will continue to be an attractive option and as a result will encourage many first home buyers to enter the market in the year ahead.
