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First-home buyers flock to newly built apartments in south-east Queensland

First-home buyers flock to newly built apartments in south-east Queensland

Under the First Home Owners’ Grant and HomeBuilder grant, buyers can receive a total of $40,000 towards their first home for properties valued at $750,000 or less, subject to eligibility criteria.

But even completed and off-the-plan projects that aren’t eligible have seen substantial interest from the keen demographic.

A lack of competition from investors due to the COVID-19-related recession is behind the trend, those in the industry say, along with changing buyer behaviour.

First-home buyers now comprise about 50 per cent of sales for some developments, up from an estimated 20 per cent before the pandemic, TOTAL Property Group managing director Adrian Parsons said.

“The first-home buyer has become one of the largest buyer segments, which we’ve never seen before,” he said.

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“We’ve noticed it very much in completed apartment buildings where the HomeBuilder grant does not apply.

“It’s hard to really understand exactly what is making these first-time buyers actually take action, but I have to think that it’s finally hitting home about how affordable a first time home is with the current level of interest rates.”

Mr Parsons said coronavirus-related lockdowns might have also led buyers to reassess their finances and housing situation.

“I think people have assessed, ‘Well, if I’m locked down and I’m in this property, am I happy being locked down in this property, or should we actually think about buying our own property, where it’s ours?’” he said.

“We’re definitely seeing the very positive flow-on effects of people being unable to travel and spend their discretionary income in other areas.”

Managing director for CBRE Residential Paul Barratt said he usually saw two to three properties a month sold to first-home buyers but, in recent months, that number had jumped to more than 10 for projects qualifying for government grants.

He said while investors were starting return after a lull caused by the pandemic, the market remained relatively open to first-home buyers.

“What they’ve had is a little bit of a holiday from the competition that investors bring to the market,” he said.

“For a first-home buyer, it is absolutely the best time to buy at the moment.

“I think as the end of the year comes up and the HomeBuilder grant expires, at the end of December, there’ll be a real rush from first-time buyers.”

Travis Gielen, director of sales at Morris Property Group, said while first-home buyers were attracted to the grants, a lack of government assistance wasn’t a deal-breaker.

He said it had been a noticeable trend at Burleigh Heads development Sandbar, which may not be eligible for grants.

“We had a lot of people initially spurred by that [the grants] and made inquiries, and then pressed ahead without the grant, just based on the fact that Burleigh’s such a strong location and a good place to invest,” he said.

He said he wasn’t surprised by the boost in interest, given how the combination of coronavirus-related restrictions and government and bank crackdowns on lending had curbed investment.

“I certainly expected to see that increase in activity from that part of the market now that competition isn’t as fierce with investors and foreign investors,” he said.

This article is republished from domain.com.au under a Creative Commons license. Read the original article.

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ANNA LEVY a journalist

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Finance

RBA Urges Banks to Keep Lending

RBA Urges Banks to Keep Lending-min

The Reserve Bank is urging major banks to use their buffers to keep lending to support business and developers following the largest economic contraction since World War II.

The Financial Stability Review showed banks’ share-to-price book ratios have recovered from March but they are still below pre-pandemic levels “reflecting a decline in the earnings outlook and a reduction in investors’ risk appetite”.

Although banks may want to maintain capital buffers, reducing credit would have a significant impact on the economy according to the RBA.

According to stress test simulations in the report showed banks have sensitivity to falls in GDP, property prices and unemployment.

Despite this uncertainty, housing finance grew 12.6 per cent in August off the back of government stimulus packages.

However, there were still risks associated with commercial real estate with conditions deteriorating in retail and the once tight office sector according to the RBA.

“The Australian banking system entered the pandemic with a much stronger capital position than in previous downturns,” the RBA review said.

“This balance sheet strength has enabled banks to absorb shocks, rather than amplify them as they did in the GFC.

“Banks have continued to lend, including enabling businesses to draw down lines of credit as a precaution early in the crisis.

“They do, however, face the prospect of sharp rises in borrower defaults.”

The review recognised some banks may be unwilling to eat into buffers due to facing automatic restrictions on earning distributions and acquiring lower capital ratios which could limit access or increase cost of funding.

Banks also want to avoiding regulatory repercussions as a way of reducing their own risks and protecting themselves.

“If banks were to cease lending in an attempt to conserve their capital buffers, the reduction in credit availability would have a significant contractionary impact on the economy,” the RBA said.

“By amplifying the downturn, this contraction in credit supply would ultimately be detrimental to the banking system.”

This article is republished from theurbandeveloper.com under a Creative Commons license. Read the original article.

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RENEE MCKEOWN

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Finance

Stimulus Pushes Lending to Record Highs

Stimulus Pushes Lending to Record Highs

Government stimulus has shown up in the latest lending figures as Australians take advantage of record low interest rates and government support to invest in new housing.

Housing finance grew 12.6 per cent in August, outstripping the previous 10.7 per cent gain in July, with first home buyers and owner-occupiers leading the charge.

First home buyers grew 18.3 per cent, while owner-occupiers clocked a 13.6 per cent increase—the largest month-on-month rise in the history of the series.

Housing finance figures are expected to increase again when the removal of responsible lending curbs take effect and place upward pressure on house prices despite stagnant net migration acting as a counter weight.

ABS’ August figures reflect customer demand in June and early July—prior to Victoria imposing its stage 3 and stage 4 restrictions.

Westpac economist Matthew Hassan said the impact on lending from Melbourne’s lockdown will be seen in next month’s figures.

“However, some other drivers of the strength in August will continue,” Hassan said.

“Reopening rebounds are likely to gather momentum in other states—‘catch-up’ activity augmented by low interest rates and ongoing fiscal supports.”

Meanwhile, the Reserve Bank said that rising levels of financial stress will increase the risk of home loan defaults.

In its bi-annual financial stability review, the bank said that if the unemployment rate hits 10 per cent it will double the rate of housing arrears.

“While credit is available at very low interest rates, reduced housing demand from very low immigration and the rise in unemployment contribute to the risk of further falls in housing prices,” the central bank said.

“This increases the potential for losses for lenders in the event of a rise in distressed sales.”

Mortgage arrears are expected to increase once the payment deferrals period ends.

Almost 900,000 mortgages, about one in 10, were deferred in March. By August, 9 per cent of loans worth $160 billion remained on deferral.

S&P analyst Erin Kitson said mortgage arrear rises are likely to be more pronounced in Victoria and areas where tourism is a major employer.

This article is republished from theurbandeveloper.com under a Creative Commons license. Read the original article.

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ANA NARVAEZ

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Continue Reading

Finance

Stimulus Pushes Lending to Record Highs

Stimulus Pushes Lending to Record Highs

Government stimulus has shown up in the latest lending figures as Australians take advantage of record low interest rates and government support to invest in new housing.

Housing finance grew 12.6 per cent in August, outstripping the previous 10.7 per cent gain in July, with first home buyers and owner-occupiers leading the charge.

First home buyers grew 18.3 per cent, while owner-occupiers clocked a 13.6 per cent increase—the largest month-on-month rise in the history of the series.

Housing finance figures are expected to increase again when the removal of responsible lending curbs take effect and place upward pressure on house prices despite stagnant net migration acting as a counter weight.

ABS’ August figures reflect customer demand in June and early July—prior to Victoria imposing its stage 3 and stage 4 restrictions.

Westpac economist Matthew Hassan said the impact on lending from Melbourne’s lockdown will be seen in next month’s figures.

“However, some other drivers of the strength in August will continue,” Hassan said.

“Reopening rebounds are likely to gather momentum in other states—‘catch-up’ activity augmented by low interest rates and ongoing fiscal supports.”

Meanwhile, the Reserve Bank said that rising levels of financial stress will increase the risk of home loan defaults.

In its bi-annual financial stability review, the bank said that if the unemployment rate hits 10 per cent it will double the rate of housing arrears.

“While credit is available at very low interest rates, reduced housing demand from very low immigration and the rise in unemployment contribute to the risk of further falls in housing prices,” the central bank said.

“This increases the potential for losses for lenders in the event of a rise in distressed sales.”

Mortgage arrears are expected to increase once the payment deferrals period ends.

Almost 900,000 mortgages, about one in 10, were deferred in March. By August, 9 per cent of loans worth $160 billion remained on deferral.

S&P analyst Erin Kitson said mortgage arrear rises are likely to be more pronounced in Victoria and areas where tourism is a major employer.

This article is republished from theurbandeveloper.com under a Creative Commons license. Read the original article.

________________________________________________________________________________

Ana Narvaez

________________________________________________________________________________

Continue Reading

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