First homebuyer statistics skewed

First homebuyer statistics skewed

Posted on Wednesday, October 16 2013 at 12:54 PM

The reduction of first homeowner grants could be distorting the statistical drop in first homebuyers, according to Cameron Kusher, a research analyst with RP Data.

Kusher has highlighted suggestions
that many first homebuyers no longer qualify for grants, and so fail to
identify themselves to lenders.

An Australian Bureau
of Statistics officer confirmed their data is collected via lending
institutions, and if borrowers don’t classify themselves as first-time
purchasers, they won’t be recorded.

During a conversation on
Twitter earlier this week, Kusher suggested first homebuyers purchasing an
existing home aren’t bothering to “tick the box”.

“We can’t accurately track
foreign buyers so why would we be able to accurately track FHB (first
homebuyers) without an incentive to do so?” he posted.

The comments were in
response to an article by Leith Van Onselen, chief economist and co-founder of
MacroBusiness.com.au.

Van
Onselen says first homebuyer
demand has continued to soften, despite nominal mortgage rates at near
multi-decade lows, indicating the recovering market is being driven almost
exclusively by investors.

“FHB nationally
slumped by 13 per cent (non-seasonally adjusted) in August and were down 22 per
cent over the year.

“They also
represented just 13.7 per cent of total owner-occupied commitments – the lowest
level since April 2004,” he notes.

Van Onselen says the reduction in
FHB numbers will result in less buyer demand and worsening inequality between
those who own property and those who don’t.

“Western
Australia, the ACT and South Australia have, or are scheduled to, reduce
their grants on pre-existing dwellings, which is yet to feed through to the ABS
data.

“Moreover, higher prices are likely to further ‘choke-off’
FHB demand.”

Kusher believes the lost
government incentives have played a major role in falling FHBs participation,
with legislative changes seeing grants reduced or
scrapped for existing homes throughout Australia.

“Now the idea behind the policy is a good one
because we do need to build more homes, however new stock is often located in
less desirable locations and at higher price points than established stock in
similar, or even sometimes superior, areas. 

“So the higher price of the new stock is acting
as a disincentive for FHB to enter into the market and is probably a major
contributor to the falling levels of FHB.”

Kusher says the government would
be loathed to induce further stimulus to the first homebuyer sector, as this
tends to simply increase prices for properties rather than improve affordability.

“If
the government was serious about helping FHB they would look at other ways to
reduce the cost of homes such as increasing supply via expanding the urban
footprints in major cities, moving to a blanket land tax rather than stamp duty,
and reducing the fees and charges associated with the new development of land.”

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