Governments need to provide better support for first home buyers, who are increasingly being priced out of the market by investors, according to Slater and Gordon’s Conveyancing Works.
Slater and Gordon’s Conveyancing Works General Manager Lee Bailie said it was time governments reviewed the support and incentives they provided to first homebuyers because they clearly weren’t working.
“Investors are fast pricing first home buyers out of the market, with loan approvals for first home buyers remaining worryingly low.
“The latest ABS statistics show only 13.2 per cent of loan approvals in January were to first home buyers, with investors still accounting for 38.5 per cent of new mortgages,” Mr Bailie said.
Research conducted by Slater and Gordon’s Conveyancing Works showed just under two thirds of Australians surveyed believe that it is reasonable to spend between 25 and 30 per cent of their monthly household income on their mortgage.
Approximately 70 per cent of the 2000 Australians the firm surveyed believed 25-30 per cent was a reasonable amount of their monthly income to spend on a mortgage; with 15 per cent saying 10 per cent or less and roughly the same amount indicating they would spend more than half.
“But the latest census data paints a very different picture,” Mr Bailie said.
“In 2011 the median monthly mortgage repayments, compared with the median monthly household income indicates the average Australian was paying approximately 36.5 per cent of their wage on their home loan.
“And we know that combined capital city home values have increased by 9.5 per cent over the past 12 months alone. (RP data)
“What all of this is telling us is that governments need to look at what is in place to encourage first home buyers into the market and what more they can be doing,” Mr Bailie said.
“Incentives like the first home owner’s grant are often subject to the fiscal will of the government of the day.
“We need to see a genuine review of and discussion around what does and doesn’t work. It may be around incentives such as the first home owner’s grant, abolishing stamp duty for first time buyers or assistance around deposits such as enabling first home buyers to access their Super.
“But it also needs to be supported with discussion and initiatives around urban planning and infrastructure to encourage and support first home owners into the market.
“Otherwise we are going to see a situation where potential first home buyers will never, in fact, own their own home,” Mr Bailie said.