First-home buyers will drive housing recovery in all markets but Melbourne next year: BIS Shrapnel's Angie Zigomanis

A return of first-home buyers to the market will revitalise the housing markets in all capitals except Melbourne in 2012, according to Angie Zigomanis, senior manager of residential property at BIS Shrapnel.

Zigomanis says there are about 130,000 potential first-home buyers nationwide in any given year. He says government incentives such as the first-home buyer’s boost and stamp duty concessions encourage potential first-home buyers to accelerate their decision to enter the market but does not create more demand from this market segment.

He notes after government incentives end the number of first-home buyers entering the market decreases as the segment normalises back to its underlying level.

About 190,000 first-home buyers entered the market in 2009 as a result of this accelerated demand, and Zigomanis says that the slowdown in this market segment in 2010 and 2011 was a result of first-home buyer interest returning to its underlying level.

He points to figures showing that first-home buyer lending enquiries have started to pick up as part of a trend that he says will cause prices to rise in all capitals except Melbourne in 2012 as a result of this interest “trickling up” across all market sectors.

“First-home buyers represent a key driver of the residential market, underpinning demand for entry-level dwellings, which in turn creates increased demand across the market,” Zigomanis says.

However, he expects Melbourne prices to remain largely flat in 2012, as supply is set to outpace demand in the Victorian capital as a number of large residential projects are completed next year.