Scott Morrison has declared it’s ‘always’ been hard to buy a first home even though prices are rising at the fastest rate since 1989.
Australian property prices have surged by 22.2 per cent during the past year, with first-home buyer numbers dropping for nine consecutive months in 2021.
A lack of homes, record low interest rates and massive savings during Covid have caused the spike.
The average home in Sydney now costs 14 times the average wage, compared to five times in 1981. Melbourne house prices are 10 times the average wage, up from three times 40 years ago.
But Mr Morrison on Wednesday said ‘it’s always hard to buy your first home’ as he announced a reissue of 4,600 spots on the Home Guarantee Scheme which helps first-home buyers pay their deposits.
With Australian property prices rising at the fastest pace since 1989, Prime Minister Scott Morrison is vowing to get more first-home buyers into the market
‘It’s always hard to buy your first home and it is still hard to buy your first home. Everybody understands that,’ he said.
‘But what we have done as a government has been able to make that more achievable for more and more Australians.’
Labor immediately slammed his comment, with Shadow Housing Minister Jason Clare telling Daily Mail Australia: ‘The fact is, it’s harder to buy a house than ever before.
‘Scott Morrison needs to get out of the Lodge and into the real world.’
Mr Morrison announced more first-home buyers will be given access to the Home Guarantee Scheme, under which the buyer pays a five per cent deposit and the Government covers the other 15 per cent.
Under the scheme, the government will reissue up to 4,651 unused guarantees for first home buyers who were unable to buy their first home last year due to Covid disruption.
House prices have soared in capital cities and regional areas, locking out many potential first-home buyers.
More than 4,600 needy Australians could get help to buy their first home in an overheating market under a federal government home guarantee scheme(pictured is a house at Torquay on Victoria’s Surf Coast)
With Australian property prices rising at the fastest pace since 1989, Prime Minister Scott Morrison is vowing to get more first-home buyers into the market.
‘We want more first-home buyers to get into the place of their dreams,’ he said.
‘The pandemic and lockdowns have interrupted the plans of many home buyers this year, so this is about ensuring we give thousands more families the opportunity they need.’
Housing Minister Michael Sukkar said that combined with HomeBuilder subsidies and the first home super saver scheme, more than 300,000 Australians had been helped into home ownership.
This included almost 60,000 Australians through the home guarantee scheme.
‘The Morrison government will continue to provide Australians who have that aspiration to go and buy a home, the opportunity to go and achieve that,’ Mr Sukkar said.
Mr Sukkar said the government was on the side of essential workers and women as ‘they make the leap into home ownership’.
However, Labor slammed the announcement and accused the Prime Minister of lying.
‘Today the Morrison Government took regifting at Christmas to a new level by suggesting an extra 4,651 homebuyers would benefit from the Home Guarantee Scheme this year,’ said Mr Clare.
‘These aren’t new places – these are places out of the originally announced 20,000 cap for the year – regifted.
‘Some people decided not to build or buy after they were allocated an original place, so there is a reallocation.’
Mr Clare also slammed Mr Morrison for claiming it’s always been hard to by a home, saying: ‘It’s harder to buy in Australia than ever before. Australians need more help to buy a home, not more lies from Scott Morrison.’
He said Labor supports the Home Guarantee scheme and would expand it.
Australian real estate is now so expensive the national median house and unit price of $698,170 would see an average-income earner struggle to repay a loan.
The program helps first home buyers and single-parent families get into their own home sooner with a deposit of as little as five per cent or two per cent respectively. Under the scheme, the government would reissue up to 4,651 unused guarantees for first home buyers from the 2020/21 financial year who haven’t had an opportunity to purchase their first home, including because of Covid disruptions (pictured is an auction at Hurlstone Park in Sydney’s inner west)
Even with a 20 per cent deposit, a full-time worker on a $90,329 salary, with a $558,536 mortgage, would be saddled with a debt-to-income ratio of 6.2.
Property prices keep surging
SYDNEY: Up 30.4 per cent to $1,360,543 (houses)
Up 15.3 per cent to $837,169 (units)
CANBERRA: Up 27.2 per cent to $999,755 (houses)
Up 14.7 per cent to $568,308 (units)
HOBART: Up 32.1 per cent to $558,455 (units)
Up 26.6 per cent to $726,779 (houses)
BRISBANE: Up 27.9 per cent to $757,194 (houses)
Up 11.4 per cent to $443,981 (units)
ADELAIDE: Up 23.9 per cent to $608,624 (houses)
Up 6.8 per cent to $380,058 (units)
MELBOURNE: Up 19.5 per cent to $986,992 (houses)
Up 9 per cent to $626,449 (units)
DARWIN: Up 20.1 per cent to $368,635 (units)
Up 14.8 per cent to $562,900 (houses)
PERTH: Up 14.8 per cent to $552,158 (houses)
Up 12.4 per cent to $400,831
Source: CoreLogic data for the year to November 2021
The Australian Prudential Regulation Authority considers a debt ratio of six to be dangerous and on Tuesday released new data showing 23.8 per cent of new borrowers in the September quarter of 2021 were in this category.
That is a big jump from the 16.3 per cent proportion a year earlier.
In the year to November, property prices across Australia rose by 22.2 per cent – the fastest annual pace since 1989, CoreLogic data showed.
In Sydney, house prices soared by 30.4 per cent to an even more ridiculously unaffordable $1.36million.
Victoria’s Surf Coast, south-west of Melbourne, has a median house price of $1.4million, making it one of six regional areas with a mid-point house price in the seven figures alongside Byron Bay, Ballina, the NSW Southern Highlands, Kiama on the NSW Coast and Noosa in Queensland.
Stephanie Asher, the Liberal Party’s candidate for Corangamite covering this area, suggested the scheme could help young people afford a home in area offering a good lifestyle.
‘With so many young people and families moving to Geelong, the Surf Coast and the Bellarine, this is about making it easier to make home ownership a reality,’ she said.
‘It’s programs like this that will help even more people see the great lifestyle and opportunities our region has to offer.’
First home buyer numbers fell by 3.8 per cent in October, marking the ninth consecutive monthly decline, and a 29.9 per cent plunge from the peak in January 2021, Australian Bureau of Statistics data showed.
The Reserve Bank on Tuesday left the cash rate on hold at a record low of 0.1 per cent but Governor Philip Lowe issued a warning to borrowers.
‘With interest rates at historically low levels, it is important that lending standards are maintained and that borrowers have adequate buffers,’ he said.
The Morrison government introduced a $500million First Home Loan Deposit Scheme in 2019 after the election, with financing provided by the new National Housing Finance and Investment Corporation.
During the onset of the pandemic, the Reserve Bank of Australia introduced a Term Funding Facility that gave funding to the banks to provide cheap housing and business loans.
Between March 2020 and June 2021, the RBA gave out $188billion, which saw the major banks slash their fixed rate to levels below two per cent and fuel a property price surge.
Dr Lowe could end up being Australia’s last boomer baby governor of the Reserve Bank who left a bad legacy for young, first-home buyers.
In September, he ruled out raising interest rates early to ‘cool the property market’.
Victoria’s Surf Coast, south-west of Melbourne, has a median house price of $1.4million (pictured is a home at Torquay), making it one of six regional areas with a mid-point house price in the seven figures alongside Byron Bay, Ballina, the NSW Southern Highlands, Kiama on the NSW Coast and Noosa in Queensland. Stephanie Asher, the Liberal Party’s candidate for Corangamite covering this area, suggested the scheme could help young people afford a home in area offering a good lifestyle
‘I want to be clear that this is not on our agenda,’ he said.
The intergenerational divide caused by surging property prices also means younger people will only be able to afford a home if their parents are rich.
The Productivity Commission noted inheritances in 2018 had climbed to $52billion, more than doubling from $24billion in 2002.
‘Over the past two decades, wealthier people inherited more than poorer people,’ it said.
Philip Lowe could end up being Australia’s last boomer baby governor of the Reserve Bank who left a bad legacy for young, first-home buyers. The Productivity Commission noted older people owned a lot more real estate which would worsen inequality (pictured is an auction at Strathfield in Sydney’s inner west)
The report noted the rising wealth of baby boomers was likely to worsen wealth inequality.
‘Projected growth in inheritances is partly driven by rising wealth among older age groups, who hold a disproportionately large share of wealth in the future,’ the Productivity Commission said.
‘Housing wealth is a significant factor driving these outcomes. Older age groups own more housing wealth, they draw down on that housing wealth slowly, and they inherit large housing wealth from their partners in old age.’
The federal government abolished inheritance tax, colloquially known as ‘death duties’, in 1979 with no major party willing to reintroduce them.
Why home buyers could be the big winners in Australia’s crazy property market sooner than you think – but rising loan rates could bring the housing boom to a swift end
Homebuyers could be the big winners of Australia’s overheated property market in 2022 as more sellers try to cash in on the boom.
Australian property prices in the year to November surged by 22.2 per cent – the fastest annual pace since early 1989, CoreLogic data showed.
But that turbocharged growth is likely to slow down next year with National Australia Bank on Thursday becoming the latest major bank to raise its fixed mortgage rates.
None of the big four banks now have lending rates below two per cent, ending ultra cheap home loans which have been a major factor in surging house prices since late 2020.
Borrowing costs are now rising from record lows as more sellers put their home on the market.
Homebuyers could be the big winners of Australia’s overheated property market in 2022 as more sellers try to cash in on the boom (pictured is a Strathfield auction in Sydney)
This is occurring as fewer Australians buy a place to live in because the prices are too high, leaving the market to investor landlords.
First-home buyers in particular are turned off, causing their numbers to plunge by a third since the start of the year.
With fewer owner-occupiers interested in buying a home, potential buyers in some markets could be in a better position.
In Sydney, the number of homes on the market compared with a year ago has surged by 64 per cent, data from real estate sales group Domain showed.
Melbourne has seen a 40 per cent increase, as listings in Perth rose by 41 per cent and by 35 per cent in Adelaide.
In Brisbane, listing levels in the week ending on November 27 were 20 per cent higher than a year earlier.
In regional New South Wales, the number of homes going on the market has climbed by 19 cent, compared with 17 per cent in regional Victoria.
Australian property prices in the year to November surged by 22.2 per cent – the fastest annual pace since early 1989, CoreLogic data showed. But that turbocharged growth is likely to slow down next year with National Australia Bank on Thursday becoming the latest major bank to raise its fixed mortgage rates
Domain senior research analyst Nicola Powell said with more choice, price growth would be likely to slow.
‘We expect buying opportunities to continue to look bright across Australia for 2022,’ she told Daily Mail Australia.
‘Many sellers are hoping to entice those dreaming of a lifestyle change.’
Auction clearance rates are also falling, with Sydney having 67.2 per cent of homes selling above the reserve at the weekend.
As recently as August 22, 81.7 per cent of homes sold under the hammer in Sydney, CoreLogic data showed.
Nonetheless, Sydney is still getting more expensive with median house prices surging by 30.4 per cent a year to an even more unaffordable $1,360,543.
Owner-occupiers instead of investors have dominated the market since the boom began in 2020 with the Reserve Bank of Australia cutting the cash rate to a record low of 0.1 per cent.
Owner-occupiers instead of investors have dominated the market since the boom began in 2020 with the Reserve Bank of Australia cutting the cash rate to a record low of 0.1 per cent (pictured is a house on the market in Melbourne)
But that is now gradually shifting, with investor loans in October rising by 1.1 per cent to the highest level since April 2015 – during a previous boom.
The value of new investor loans had grown for 12 consecutive months to reach $9.7billion, the Australian Bureau of Statistics housing finance data released on Thursday showed
This occurred as new loans for owner-occupiers fell by 4.1 per cent in October.
First home buyer numbers fell by 3.8 per cent, marking the ninth consecutive monthly decline, and a 29.9 per cent plunge from the peak in January 2021.
RateCity research director Sally Tindall said while investor activity was increasing, they made up just a third of the market in 2021 compared with 46 per cent in 2015.
This would make the Australian Prudential Regulation Authority less likely to tighten lending rules again, following a November 1 change requiring banks to assess a borrower’s ability to cope with a three percentage point mortgage rate increase.
‘While the value of investor lending is nearing an all-time high, as a proportion of all new loans it’s still a way off from smashing any records,’ Ms Tindall said.
The Commonwealth Bank and Westpac, Australia’s biggest banks, are expecting property price growth to slow in 2022 before falling in 2023 as the Reserve Bank raises rates earlier than previously promised.
The Commonwealth Bank, Australia’s biggest home lender, is expecting Sydney property prices to climb by 27 per cent in 2021, before slowing to 6 per cent in 2022 and plunging by 12 per cent in 2023.