Investors Dominate The Mortgage Market – As First Home Buyers Are Priced Out

Investors Dominate The Mortgage Market – As First Home Buyers Are Priced Out

Soaring prices and an influx of overseas buyers are pricing Australians out of the property market as reports show less than 10% of mortgages were processed for first-time buyers.

Of applications recorded, almost every state across Australia showed a month-on-month decline in first home buyer applications.

  • WA fell to 19.5% last month from 24.2% in January
  • South Australia fell to 13.1% from 15.5%
  • Victoria fell to 10.3% from 11.2%
  • New South Wales remained the lowest in the country on a steady 3.4%

The only state to buck the trend was Queensland rising slightly from 6.5% to 6.9%.

According RP Data research, property values climbed 9.8% in 2013 representing the fastest rate of annual growth since 2010. The direction of property prices has not changed in 2014, with combined capital city growth rising by 1.4% in the year to date.

Part of the problem for first home buyers is finding an affordable principal place for residence in a location that will not disrupt their current working and social lives.

This month, across Australia the lowest median price for any capital city is $410,000 for a house in Adelaide and $261,000 for a unit in Hobart.

March median house prices in Australian capital cities:

  • Sydney:  $690,000
  • Melbourne: $463,000
  • Brisbane: $465,000
  • Adelaide: $410,000
  • Perth: $530,000
  • Hobart: $370,000
  • Darwin: $590,000
  • Canberra: $532,000

-Source RP Data

The recent influx of overseas buyers is also contributing to a rising market, according to a recent report from the Australian Foreign Investment Review Board.

The 2012/13 report showed approved foreign investment in Australian residential property totalled $51.9 billion and exceeded off shore investment in the resources sector, with investment in mineral exploration and development totalling $45.1 billion.

Of these overseas, investors the Chinese were prevalent in the market for property acquisition in Australia, with a report released by investment bank Credit Suisse predicting Australian property purchases by the Chinese will total $44 million over the next seven years.

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