- July 29, 2013
- Posted by: admin
- Category: Enconomy, Finance News, Financial goals, First Home Buyer, House prices, Inflation, Rental Growth, Wealth
According to RP Data’s latest property pulse, since the end of 2007 combined capital city home values increased by 13.4 per cent, which compares with a 32.1 per cent increase in rental rates.
Rental rates increased at more than double the rate of home values over this period. Meanwhile, in five and a half years, growth in capital city home values has not increased at a rate higher than inflation.
With mortgage rates almost at record lows, you would think first home buyers would be capitalising on these conditions; however, it’s investors and upgraders that are really the key beneficiaries.
In a typical market, an escalation in rents coupled with limited value growth would see increased first time buyer activity. However, this has not been the case to date. The reasons are likely due to a shift in first home buyer incentives to specifically target the more expensive new product as opposed to generally more affordable existing products in a number of states.
Significant demand by first time buyers was brought forward to 2009 due to low mortgage rates and large incentives at that time.
Upgraders and investors are now taking advantage of the low mortgage rates and limited value growth to upgrade from their current home into a superior one as mortgage costs have tumbled