Concerns about FHBs misguided as Gen Ys turn to investing: 1300HomeLoan

The decreasing proportion of first home buyers and owner occupiers in the home loan market has had many concerned in recent months.

Even the Reserve Bank has warned about the skew towards investor loans.

However, 1300HomeLoan’s managing director John Kolenda claims first timers buying where they can afford and continuing to rent, making them investors, are a growing segment of the market.

He said the Australian Dream is not dying, with home ownership goals just changing.

“Australia, in contrast to Europe where most people prefer to rent, has traditionally been a bastion of home ownership and Generation Y is still keen to enter the housing market despite a reported drop off in their numbers in recent times,” said Kolenda.

“What we are seeing though is more first time buyers become first time investors.”

He said many of those in the younger generation like their lifestyle and are happy to rent in the areas they want to live in, or stay at home with their parents, while still seeing an advantage in purchasing where they can afford.

“Younger buyers also are keen to pay down their loans as fast as possible while interest rates are low to boost their equity and possibly upgrade to another property,” he said.

He also said that the Australian Bureau of Statistics figures are likely underreported, which they have acknowledged themselves is a possibility, as they rely on first home buyer grant data.

“There are far fewer first time buyers receiving benefits now as government schemes favour new homes over established ones, and the ABS also would not be tracking first home buyers who are investing because they don’t get grants,” he said.

He also said “anything that can help first home buyers get into the market to buy their first home is a good thing”, supporting calls to allow access to superannuation for first timers.

Just recently, Genworth's "Home Grown" Mortgage Industry Perspectives report released this month also touched on the decreased number of first home buyers being indicated by the ABS statistics.

Source: Genworth

"Government policy with respect to enhanced access to the property market for FHBs is a more complex area of discussion, and the industry is divided in its opinions. One viewpoint is that FHBs are being squeezed out of the property market and this is supported by data from the ABS, which shows that FHB loans as a proportion of all dwellings financed fell to 11.8% in August 2014, down from a high point of 31.4% in May 2009, and the lowest level ever recorded," the report noted.

They also marked a "broad question mark" over the whether the data accurately displays this true number of first home buyers, or whether it's more representing those applying for grants.

"The latter would understate the number of FHBs entering the property market (since several states have removed the incentives for those wishing to purchase established dwellings)," it explains.

When they surveyed lenders and brokers as to how many first time buyers they were writing loans for, the picture is remarkably different to the ABS figures.

Source: Genworth

"Nonetheless, the story remains the same and FHBs are apparently being squeezed out of the property market," the report concludes.

Genworth's Streets Ahead survey recorded that first home buyers are even less inclined to believe that now is a good time to buy - down from 57% in September 2012, to 49% in September 2013 to an even lower 37% in September 2014.