First home buyers snap up property due to ‘fear of missing out’
ME Bank's latest quarterly report found that Australia's rising house prices are not deterring first home buyers, and instead buyer sentiment has flipped 180º. The surge of first home purchases is accelerating the increase in property values due to competition in the market.
The report, conducted at the beginning of January, found that more than half (51%) first home buyer respondents are planning to buy property within the next 12 months. This confidence in the market is even despite 92% of all respondents agreeing that housing affordability is a big issue in Australia.
Urban's data further reinforces ME Bank's findings, with 45% of first home buyers making the most property enquiries over the December/January period, compared to next home buyers (39%) and investors (16%).
In November, Urban reported that Next Home Buyers were the most proactive in their property search; however, this sentiment has appeared to have shifted within the space of two months.
The innate fear of "missing out"
ME Bank's General Manager Andrew Bartolo explains that fear of missing out could be a potential reason for the sudden increase in first home buyers' uptake in residential property.
"The recent property price recovery has likely nudged first-home buyers to get in while they can – as though it's now or never – and has created a sense of FOMO," Bartolo says.
"Low-interest rates and commentary in the market for the support of first-home buyers may have also contributed to an increase in home-buying intentions."
In November last year, there were even a number of first home buyers who camped overnight to secure property at Victoria's Halcyon Armstrong Creek, 84 kilometres from Melbourne's CBD.
Purchase with diligence (rather than haste) to be rewarded
Increased first home buyer competition is not an unexpected market change. We observed the same trend occur in both 2019 and 2018, which goes to show the ebbs and flows of the tumultuous property market. While there is discussion across the market suggesting now is the best time to buy property, many industry experts have weighed in on the importance of buyers purchasing property at a time that is right for them, rather than being tempted to race into a sale.
"While it may be tempting to get into the market now before prices are predicted to keep rising, it's important to think long-term. Picking the peaks and troughs of the housing market is difficult - buy when it's right for you, at a price you can afford, and get advice from a professional."
Andrew Bartolo, ME Bank General Manager
In addition to Andrew's advice, due diligence is a critical process when purchasing any property – and one that takes time. A decision made with haste could mean buyers neglect vital aspects of their due diligence research because of time constraints.
Property seekers are looking for more variety of housing stock
Buyer requirements are changing, providing an excellent opportunity for developers to think creatively about their future projects. According to ME Bank's report, almost 1 in 2 respondents identified a lack of choice available on the property market. This means buyers could be making sacrifices regarding their home and its location. Many first home buyers are moving to the outer suburbs of Australia's major cities due to housing affordability.
Developers are encouraged to accommodate the burgeoning market with a broader range of apartment offerings and take a more future-focused approach. This could involve creating more flexibility and customisation within each floorplan, projects with a more sophisticated integration within the community, more practical amenities (worksheds, vegetable gardens, co-working spaces etc.) or even 'rent with the option to buy' developments.
It'll be interesting to watch how the next few months play out, and whether developers cater to the rapidly growing demand.
If there's something you believe apartments are lacking that developers could include, let us know in the comments.