Report finds Canberra has the highest increase in first-home buyer loans in the country

The number of first-home buyers taking out loans in Canberra has increased the most in all of Australia, according to a new report. 

The Real Estate Institute of Australia’s (REIA) latest Housing Affordability Report, released on Wednesday, has revealed the number of first-home buyers taking out loans in Canberra had reached 865 in the three months to June, increasing by 26.1 per cent from the previous quarter.

First-home buyers’ average loans equated to $500,462, which decreased by 5.1 per cent from the previous quarter.

According to the report, 33.7 per cent of the owner-occupier market in the ACT were first-home buyers, which amounted to 3 per cent of the national total over the quarter. 

Mark Larmer of Independent Our Team attributed the change in first-home buyers taking out loans to the continually increasing rents in the ACT. 

“High rents, coupled with a lower entry price at the moment, compared to a year ago, would likely be a good motivator for these first-home buyers to get in while they can,” he said. 

“There is less competition, a little bit more stock to choose from and cheaper pricing within that price range than this time last year.

“There is also free stamp duty for those who are eligible, which is going to be another significant motivator to get into the housing market.” 

According to the latest Domain Rent Report, the ACT recorded the highest median weekly asking price for a house and unit in the country, at $690 and $550 a week, respectively. 

People who saw no possibility of entering the housing market last year whose 12-month leases are now coming to an end may also be looking to get their foot in the property door, he added. 

“When some buyers couldn’t get into the housing market last year, they may have decided to rent while it all cooled off … they’re probably thinking now is as good a time to buy as any,” Larmer said. 

Increasing rental prices may also push current tenants into units, encouraging what is already a growing interest in the unit market, Richard King of Bastion Property Group said. 

“I think the increasing rents in Canberra are making home ownership more appealing in comparison to renting,” he said. 

“This is also making the unit market in Canberra more desirable as well, which I think we will see in the next couple of years particularly.

“If you’re a young couple renting a three-bedroom home, you would likely consider purchasing a three-bedroom unit instead … we will see the unit market really take off, I think.” 

Speaking on the report, REIA president Hayden Groves said there had also been a national decrease in housing and rental affordability over the June quarter.

“The decline in house affordability over the June quarter, down 2.7 percentage points, outpaced the decline in rental affordability, down 0.4 percentage points,” he said. 

“Nationally, the portion of income required to meet average loan repayments increased to 38.4 per cent, an increase of 4.7 percentage points over the past year.

“This is due to a combination of rising interest rates and higher average loans with average loan repayments increasing over the past year by $621 per month.”