http://www.theaustralian.com.au/archive/business-old/home-buyers-cautious-despite-grant/story-e6frg9gx-1111117796707
KEVIN Rudd’s bold bid to lure first-home buyers into the nation’s sluggish property market has been greeted with caution by young investors, with the increase in the first-home buyer’s grant failing to generate an immediate kickstart to the ailing sector.
Housing clearance rates remained soft across the country over the weekend, particularly in the nation’s biggest markets of Melbourne and Sydney, which showed no signs of recovering from their torpor.
Many homes continue to sell for well under what their owners had hoped to get.
When Melbourne grandmother Jennifer Webbe put her home of 15 years on the market, she thought she would get $740,000 for her house in the city’s sought-after southern suburbs.
But reality came crashing down – in concert with the world’s financial markets – and Ms Webbe sold her McKinnon house on the weekend for about $100,000 less than she wanted, one week before her scheduled auction next Sunday.
“Each week the market has got worse and worse,” she said.
“Last week when the stock market crashed, I wasn’t looking good. I felt my timing wasn’t great. I didn’t have a great number of people coming through the house.”
Although she didn’t get the price she wanted, Ms Webbe didn’t have to look far to find cautionary tales. Just a few doors down another house was auctioned yesterday. The 40-strong crowd remained silent and the house was passed in without anyone making a single bid.
While the Government’s decision last week to double the first-home owner’s grant from $7000 to $14,000 for established dwellings – and tripling it to $21,000 for newly built properties – made little difference to real estate balance sheets on the weekend, there were indications that the financial carrot could turn the industry around. Real Estate Institute of Victoria chief executive Enzo Raimondo said that although few first-timers made the plunge over the weekend, there was a noticeable rise in the number of young people inspecting properties.
“People are still being cautious, they’re not going to hear about the grant and buy a home straight away; they’re going to look around first,” he said. First-home buyers make up 17 to 20 per cent of the market. We will definitely see a boost soon.”
One of those to benefit from the doubling of the first-home buyer’s grant is Sydney couple Corey Hammond, 23, and Caitlin Flynn, 20, who exchanged contracts on a unit at Cronulla, in southern Sydney, on Friday.
Friends and relatives of the plumber had been urging the couple to buy now.
“It’s our first home – we thought we would get in early,” Ms Flynn said. “It’s a good time to buy.”
The couple planned to buy the unit before learning of the increase to the grant, and the extra $7000 was most welcome.
“It gives us an extra $7000 to go straight off the payments, and the other $7000 is helping with the insurance mortgage,” Mr Hammond said.
According to industry analysts, the worry for investors is that when the market does begin to turn around, it will be artificially inflated by first-time buyers armed with their increased government grant. Australian Property Monitors senior economist Liam O’Hara said that although the increase to the home buyers’ grant might see clearance rates become healthier over the next few months, ultimately it would exacerbate the problem of housing affordability.
“What we will see is prices go up, but throwing money at people is not an effective way to tackle housing affordability,” Mr O’Hara said.
“That extra $14,000 is not going to mean much in six months time when a first-home buyer will be looking at paying $20,000 more for a property than they would have had to today.”
Senior property analysts Michael McNamara of RP Data Valuations agreed.
“It wasn’t anything to do with housing affordability,” he said. “What the Rudd Government is trying to do is prop up asset prices. First-home buyers who are sitting around saying this is great, this is going to help housing affordability, think again. It’s really being used to prop up house values and to stimulate the local mortgage market. They are not going to save $14,000. There are now a whole lot of other first-home buyers out there with $14,000 who are going to compete with you on the same properties.”
However, not everyone is pessimistic. Harley Dale, senior economist with the Housing Industry Association, said there could well be a boost in the market over the next 18 months.
“We expect an additional 15,000 original dwellings to be built as a result of the tripling of the grant,” he said.
Additional reporting: Milanda Rout
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Friends and relatives of the plumber had been urging the couple to buy now.
“It’s our first home – we thought we would get in early,” Ms Flynn said. “It’s a good time to buy.”
The couple planned to buy the unit before learning of the increase to the grant, and the extra $7000 was most welcome.
“It gives us an extra $7000 to go straight off the payments, and the other $7000 is helping with the insurance mortgage,” Mr Hammond said.
According to industry analysts, the worry for investors is that when the market does begin to turn around, it will be artificially inflated by first-time buyers armed with their increased government grant. Australian Property Monitors senior economist Liam O’Hara said that although the increase to the home buyers’ grant might see clearance rates become healthier over the next few months, ultimately it would exacerbate the problem of housing affordability.
“What we will see is prices go up, but throwing money at people is not an effective way to tackle housing affordability,” Mr O’Hara said.
“That extra $14,000 is not going to mean much in six months time when a first-home buyer will be looking at paying $20,000 more for a property than they would have had to today.”
Senior property analysts Michael McNamara of RP Data Valuations agreed.
“It wasn’t anything to do with housing affordability,” he said. “What the Rudd Government is trying to do is prop up asset prices. First-home buyers who are sitting around saying this is great, this is going to help housing affordability, think again. It’s really being used to prop up house values and to stimulate the local mortgage market. They are not going to save $14,000. There are now a whole lot of other first-home buyers out there with $14,000 who are going to compete with you on the same properties.”
However, not everyone is pessimistic. Harley Dale, senior economist with the Housing Industry Association, said there could well be a boost in the market over the next 18 months.
“We expect an additional 15,000 original dwellings to be built as a result of the tripling of the grant,” he said.
Additional reporting: Milanda Rout
Copied from different source:
Home buyers cautious despite grant
Trad, Sanna. John Stapleton. The Australian [Canberra, A.C.T] 20 Oct 2008: 1.
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Abstract
“Last week when the stock market crashed, I wasn’t looking good. I felt my timing wasn’t great. I didn’t have a great number of people coming through thehouse.”
“It’s our first home — we thought we would get in early,” Ms [Caitlin Flynn] said. “It’s a good time to buy.”
“It wasn’t anything to do with housing affordability,” he said. “What the Rudd Government is trying to do is prop up asset prices. First-home buyers who are sitting around saying this is great, this is going to help housing affordability, think again. It’s really being used to prop up house values and to stimulate the local mortgage market. They are not going to save $14,000. There are now a whole lot of other first-home buyers out there with $14,000 who are going to compete with you on the same properties.”
Full Text
KEVIN Rudd’s bold bid to lure first-home buyers into the nation’s sluggish property market has been greeted with caution by young investors, with the increase in the first-home buyer’s grant failing to generate an immediate kickstart to the ailing sector.
Housing clearance rates remained soft across the country over the weekend, particularly in the nation’s biggest markets of Melbourne and Sydney, which showed no signs of recovering from their torpor.
Many homes continue to sell for well under what their owners had hoped to get.
When Melbourne grandmother Jennifer Webbe put her home of 15 years on the market, she thought she would get $740,000 for her house in the city’s sought-after southern suburbs.
But reality came crashing down — in concert with the world’s financial markets — and Ms Webbe sold her McKinnon house on the weekend for about $100,000 less than she wanted, one week before her scheduled auction next Sunday.
“Each week the market has got worse and worse,” she said.
“Last week when the stock market crashed, I wasn’t looking good. I felt my timing wasn’t great. I didn’t have a great number of people coming through thehouse.”
Although she didn’t get the price she wanted, Ms Webbe didn’t have to look far to find cautionary tales. Just a few doors down another house was auctioned yesterday. The 40-strong crowd remained silent and the house was passed in without anyone making a single bid.
While the Government’s decision last week to double the first-home owner’s grant from $7000 to $14,000 for established dwellings — and tripling it to $21,000 for newly built properties — made little difference to real estate balance sheets on the weekend, there were indications that the financial carrot could turn theindustry around. Real Estate Institute of Victoria chief executive Enzo Raimondo said that although few first-timers made the plunge over the weekend, there was a noticeable rise in the number of young people inspecting properties.
“People are still being cautious, they’re not going to hear about the grant and buy a home straight away; they’re going to look around first,” he said. First-home buyers make up 17 to 20 per cent of the market. We will definitely see a boost soon.”
One of those to benefit from the doubling of the first-home buyer’s grant is Sydney couple Corey Hammond, 23, and Caitlin Flynn, 20, who exchanged contracts on a unit at Cronulla, in southern Sydney, on Friday.
Continued — Page 2
From Page 1
Friends and relatives of the plumber had been urging the couple to buy now.
“It’s our first home — we thought we would get in early,” Ms Flynn said. “It’s a good time to buy.”
The couple planned to buy the unit before learning of the increase to the grant, and the extra $7000 was most welcome.
“It gives us an extra $7000 to go straight off the payments, and the other $7000 is helping with the insurance mortgage,” Mr Hammond said.
According to industry analysts, the worry for investors is that when the market does begin to turn around, it will be artificially inflated by first-time buyers armed with their increased government grant. Australian Property Monitors senior economist Liam O’Hara said that although the increase to the home buyers’ grant might see clearance rates become healthier over the next few months, ultimately it would exacerbate the problem of housing affordability.
“What we will see is prices go up, but throwing money at people is not an effective way to tackle housing affordability,” Mr O’Hara said.
“That extra $14,000 is not going to mean much in six months time when a first-home buyer will be looking at paying $20,000 more for a property than they would have had to today.”
Senior property analysts Michael McNamara of RP Data Valuations agreed.
“It wasn’t anything to do with housing affordability,” he said. “What the Rudd Government is trying to do is prop up asset prices. First-home buyers who are sitting around saying this is great, this is going to help housing affordability, think again. It’s really being used to prop up house values and to stimulate the local mortgage market. They are not going to save $14,000. There are now a whole lot of other first-home buyers out there with $14,000 who are going to compete with you on the same properties.”
However, not everyone is pessimistic. Harley Dale, senior economist with the Housing Industry Association, said there could well be a boost in the market over the next 18 months.
“We expect an additional 15,000 original dwellings to be built as a result of the tripling of the grant,” he said.
BIDDING LOW
Residential auctions in capital cities
SYDNEY
Total listed …….. Saturday … Last week … Sat Oct 20, 2007
for auction ……… 321 ……….. 339 ………… 357
Clearance rate … 55% ……… 48.5% ……… 63%
MELBOURNE
Total listed …….. 590 ……….. 585 ………… 811
Clearance rate … 55.2% ……. 54.3% …….. 79.1%
ADELAIDE
Total listed …….. 25 …………. 26 ………….. 52
Clearance rate … 40% ……… 50% ………… 70.8%
BRISBANE
Total listed …….. 60 …………. 62 ………….. 43
Clearance rate … 40% ……… 24.5% ……… 47.4%
Source: www.homepriceguide.com.au
Credit: Sanna Trad, John Stapleton, Additional reporting: Milanda Rout