First Home Buyers Languish at ‘Record-low Levels’

First home buyers continue to “languish at near record-low levels” as wages grow at their slowest pace in almost 20 years.

Looking at wages growth between December 2008 and March 2016, data from CoreLogic RP Data shows that wage growth has been less than half that of cumulative house price growth over the same period.

Nationally, wages have increased by 23.4% between December 2008 and March 2016, whilst home values have increased by 51.7% across the combined capital cities. Wages are now growing at their slowest pace in at least 18 years, according to CoreLogic RP Data.

CoreLogic RP Data research analyst Cameron Kusher said this is particularly noticeable in New South Wales and Victoria.

“While the increases highlighted include strong wage increases in the latter part of the mining boom, nonetheless, it shows that in NSW and VIC wages are increasing at a much slower pace than home values in Sydney and Melbourne are,” he said.

House prices in Sydney have growth by 80.2% over the period whilst wages in NSW have increased by just 23%. In Melbourne, home values are up 67.8% whilst wages in VIC are up just 23.6%.

However, Kusher said this is having the most profound effect on first home buyers.

“While lending to owner occupier first home buyers has fallen, lending to investors and subsequent buyers has increased in most states and territories with substantial rises in NSW and VIC,” he said.

“Those that do not yet own a property will struggle to compete with investors and upgraders who have been active in the market and where significant equity has been acquired.”

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