Tough market for first-home buyers

There is no denying things are tough for first-home buyers, particularly those wishing to purchase property in hot markets like Sydney and Melbourne.

Not only are property prices and home loan sizes growing at a rapid pace, but first-home buyers are being given little support by the state and federal governments.

New research from the Australian Bureau of Statistics shows the average home loan has grown almost four times faster than the average full-time wage. According to the data, the average home loan grew by 18.5% over the two years to April 2015 - from $301,800 to $357,500 - while the average Australian full-time wage grew just 3.6% - from $77,225 to $80,054.

At the same time, most state governments have removed their first-home owner grants for those choosing to purchase established properties.

At Mortgage Choice, our data shows more than 80% of first-time buyers who bought property within the past 12 months actually purchased an established property, meaning the vast majority of them missed out on a government grant altogether.

Furthermore, in many instances the state government stamp duty concessions provided to first-home buyers are actually failing to keep pace with property price movements. In Sydney, for example, the median house price is $772,200, yet first-home buyers are only afforded stamp duty concessions on properties purchased up to the value of $650,000. In other words, first-home buyers who purchase an average-priced dwelling receive no benefit or support from the government.

At Mortgage Choice, we believe first-home buyers deserve greater support and government incentives. Initiatives such as the Eden Development, where first-home buyers will be given "first dibs" on the apartments sold in the Greenacre complex in Sydney's south-west, are a good start, but more needs to be done.

Personally, I would like to see first-home buyers receiving tax incentives similar to those afforded to property investors. If first-home buyers could have their taxable income reduced during the first three years of owning their property, I think it would encourage a lot more buyers into the market.

Unfortunately, sweeping changes like this are unlikely to be introduced any time soon. So while we can't expect significant changes in the short term, I think we should continue to put pressure on the government to stop talking about the issue of housing affordability and start acting.

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