Robust rental growth forecast for coming years: RP Data
First-home buyer number are likely to remain low in the short term, although initial signs of improvement came in recent housing finance commitments after numbers fell in January 2011 to their lowest levels in six years, according to RP Data.
The important buying group accounted for 15.4% of owner-occupier finance commitments, based on housing finance data issued by the Australian Bureau of Statistics for May 2011.
There were 8,226 new home loan commitments by first-home buyers during the month, which was 17.2% higher than during the previous month.
Over the 12 months to May 2011 there was a total of 90,317 finance commitments for first-home buyers, compared with 149,469 at the same time last year, a fall of 39%.
RP Data analyst Cameron Kusher says the result highlights the slowdown in first-home buyer activity after the conclusion of the First Home Owners Grant Boost.
First-home buyer numbers fell to a low of 14.9% of the market in early 2011.
Kusher predicts it’s unlikely that first-home buyer activity will increase much in the short-term given current housing market conditions.
He believes that consumers have become extremely debt-cautious.
“The issue facing the housing market is that at a time when first-home buyer activity is low, so too is activity from investors.
“Although investors can negatively gear properties, the cashflow still needs to be found to fund day-to-day expenses and any mortgage payment gaps.
“With caution surrounding debt, the likelihood of investors taking on a negatively geared property investment which has such a high cost to purchase is unlikely.
“Rental returns have improved over the last 12 months increasing from 3.9% to 4.2% for houses and for units from 4.7% to 5% across the combined capital cities,” Kusher says.
“Although the uplift in rental returns is positive, these need to improve substantially if significant opportunities for positively geared rental properties are to be achieved.”
RP Data expects fairly robust rental growth in the coming few years as building approvals fall and sales volumes remain below average resulting in increased competition for rental stock and rental rate increases.
