First home buyers strike movement could create opportunity for property investors: Experts

Louis Christopher, of independent property advisory and forecasting research house, SQM Research, says the campaign will "bring attention to the plight of first home buyers and affordability", but is unlikely to have a strong impact either in the short- or long-term.

"I don't think in itself it will bring some sort of downturn in the market," Christopher says.

"And if there was an impact, all you'd see is bargain hunters come in and buy a property."

His comments come as Australian Property Monitors' weekend auction figures show a 57% clearance rate for Sydney, with 398 properties auctioned.

The Real Estate Institute of Victoria said the clearance rate was 61%, "confirming that demand and sentiment has not changed" since the last rate rise.

REIV chief Enzo Raimondo says while the clearance rate of 61% is lower than this time last year, the number of properties available in 2011 was much higher than the corresponding period (772 versus 532).

Dr Andrew Wilson, senior economist of Australian Property Monitors, says with figures in February showing lending to first home buyers near a record low, we might be seeing an "adjustment process" after demand was boosted by the Government's first home buyers grant during the GFC.

Wilson warns while we might be seeing the signs of first home buyers abandoning the market, they might end up shooting themselves in the foot.

"If demand flattened at the bottom end, I think that'd be a signal for investors," he says, saying investors had been sitting on the sidelines since mid-2010, putting their money into high-interest deposit accounts instead.

While Wilson doesn't believe the first home buyers strike has any legs, he says it at least shows the "movers and shakers" that there are "significant barriers to entry".

He also warns that a first home buyers strike might cause rents to rise, as greater demand for rental properties pushes up yields, increasing property's attractiveness to investors.

SQM Research's Christopher is calling on politicians to look seriously at the issue of affordability, saying on some metrics Australian property is overvalued.

He suggests tax breaks for developers and those with the power to increase supply, and says councils need to look closely at development opportunities in existing suburbs.

"It's in the national interest that the focus toward capital allocation should be on productive purposes," Christopher says.

"We spend a lot of more money on housing – the focus should be in investing in companies, things that create."

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written by inquirer, April 04, 2011

Anecdotal evidence suggests it is a lot cheaper to rent an apartment than to service the mortgage on one in the same block. The indices for home prices and rentals got out of whack a few years ago, so that a new investor is getting a relatively poor return these days. To bring the indices back to the nineties parities would require either a drop in dwelling prices or a rise in rents. For now, expect the second of the two.

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written by Bovver Boy, April 04, 2011

Those so-called "Real Estate Experts" - in reality nothing more than second rate lobbyists for various developer and real estate associations - have been getting things wrong for so long now, that I can't understand why the media still gives them any space in these reports...

With houses now at record levels of unaffordability in Australia, instead of looking for real world answers, all these amateur hour "experts" seem capable of is making more excuses and misdirections on behalf of their industry bosses..

A decent property crash (~ 30-40%) is the best answer to the current lack of affordable housing on local markets. And hopefully after the dust has settled, many investors will look to again putting some of their loose cash into real "productive" investments, rather than chasing quick profits through "churning" housing stocks.