Rates don't deter first buyers
INTEREST rate movements are currently the least influential factor affecting whether potential first home buyers can enter the property market, according to a survey by leading mortgage broker Loan Market.
Loan Market corporate spokesman Paul Smith said a survey of the company's mortgage brokers found just five per cent thought interest rates are the main reason first home buyer activity is currently subdued.
Mr Smith said 52% of the 221 broker respondents said lack of genuine savings was the main reason keeping first time buyers out of the market.
"The biggest hurdle for first home buyers is saving for that initial home loan deposit," Mr Smith said.
"While it has been well documented that Australian consumers have been prioritising savings, this has been hard for the first home buyers."
Mr Smith said cost of living increases as well as an expensive rental market have been contributing factors keeping potential buyers from entering the market.
He said while a reduction by the Reserve Bank of Australia (RBA) of the current cash rate of 4.25% would be welcome, it does not seem to be a major influence on the first home buyer sector.
"A cash rate reduction will certainly benefit some of the struggling sectors of the economy, and will pressure the banks to scale back any recent rate rises, but first home buyers simply won't come back just with lower interest rates," he said.
Mr Smith said 25% of respondents cited stamp duty as an issue for first time buyers.
"Stamp duty remains an expensive requirement of purchasing property. So much so that it's stalling activity in states where few or no exemptions are applied," he said.
Mr Smith supported the idea of a 'pay-as-you-go' initiative towards stamp duty with payments made over several years in a scheme similar to HECS.
Thirteen per cent of brokers said house prices were the main influence on first time buyers while just 5% said job security.
What is the main reason first home buyer activity remains subdued?