Across the nation, first home buyers have been in hiding in the past year with 40,000 fewer buyers taking the plunge to purchase in the 12 months to July 2011.
But they are back in force in WA, helping drive what appears to be initial signs of market recovery according to early results released for the September quarter.
Whilst the results are not game-changing, it’s a move in the right direction. David Airey, president of the REIWA explains, “First home buyer activity has been very strong, the level of discounting by sellers has flattened out and rental yields for investors has improved.”
Early figures for Perth’s median house price show a decline from $480,000 in June to $450,000 in September. However, Mr Airey explains these figures are likely to increase once the full set of data comes through, “It’s important to note that an estimated 28 per cent of sales activity was from first home buyers, most of whom purchase under $450,000. This is pulling the median downwards because of the increased sales of more affordable homes, with the median purchase price for a first time buyer now sitting at $415,000. It’s also the case that late settlements yet to be assessed will likely see the revised median for September come in at around $465,000, and showing roughly a 2 per cent fall for the quarter.”
So what exactly is fueling the increase of first home buyers in the market? According to Mr Airey, “Largely it’s the fact that the number of upgrade buyers has fallen, so as a proportion of the overall market first home buyers have increased. But it’s also because there is plenty of stock, falling house prices and stable interest rates, all of which adds to the incentives for first time buyers.”
With First Home buyers flooding the market, this in turn should provide impetus for upgrade buyers to enter the market, many of whom are waiting for a first home buyer to purchase their existing dwelling so they can move on. Many have been reluctant to borrow or spend due to concerns with broader national and international economic conditions.
The outlook for WA in upcoming months brings more good news with October data already showing a 19% increase in reported sales. Longer term, REIWA expects that stronger signs of recovery will emerge by the middle of next year and that the median price will start to rise, very modestly, from the June quarter of 2012 as supply and demand reach a better balance.