Auctions were listed in record numbers to attract buyers on the last weekend of the boosted first-home owners grant, amid warnings young people will be hit hard by rising interest rates.
From Thursday, the first-home grant will be cut from $14,000 to $10,500 for existing homes and from $21,000 to $14,000 for new homes, before being scaled back to $7000 next year.
In what has been dubbed as ‘Super Weekend’, nearly 700 properties were listed for auction between Saturday and Monday in NSW. In comparison, there were only 200 properties put up for sale in Sydney in the first weekend of September.
“This was ‘auction fever’ the likes of which we haven’t seen in decades”, REINSW President Steve Martin said.
But Byron Rose, President of the Real Estate Buyers Agents Association of Australia, expects the high level of competition of the last few months to wind back after the grant is cut this week.
Mr Rose also told SBS that after six tumultuous months in the housing market, an increased supply of property – which is typical of spring – will contribute ‘to make the steam come out of the pot’.
First time buyers ‘over-paying’
The end of the extended first-time owners grant might be good news for buyers, as some say the stimulus helped pushing housing prices up.
REBAA president Byron Rose said first home buyers had become increasingly aware that they were over-paying while the extended first-time buyers grant was available.
“A number of first home buyers were looking but decided not to buy for the risk of over-paying,” he told SBS.
His view were confirmed by figures put out by the Investors Club today.
The club said in Western Australia the average first-home loan had soared by $41,000 in 12 months.
Loans went up by an average of $22,000 in South Australia, $21,000 in Victoria and Tasmania, $18,000 in NSW and $12,000 in Queensland, the Investors Club said.
First home buyers ‘to be hit by rising rates’
Mr Rose said home owners would come under significant mortgage stress when the Reserve Bank started to lift rates, as it had indicated it would.
“I am very concerned,” he said.
“There has been too much hope around getting first time owners into the market and not enough education about rising rates”.
Economy ‘cannot sustain massive growth’
Mr Rose believes the Australian housing market is poised to grow for the next 3-5 years but he does not expect a massive growth.
“The Australian economy cannot sustain it,” he said.