New information from the Real Estate Institute of Victoria (REIV) has shown that first home buyers in the state are still playing an integral part in the real estate market.
According to the REIV, first home buyers account for approximately 20 per cent of transactions for real estate in Melbourne and surrounding areas of the state. This is a significant share of buyers in the market and shows that first home buyer activity is relatively strong.
However, the REIV noted that since changes were made to state-provided first home buyer incentives, there has been a change in activity.
The introduction of the First Home Owner Boost in October 2008 resulted in a jump in the number of transactions by first time buyers by 76 per cent from the month before the scheme was put in place.
This figure reduced over time, however, in January 2010 when the First Home Owner Boost was removed.
After reaching a high of 4,977 grants in June 2009, this figure fell to 2,133 in January 2011 - a year after the boost was taken away.
By analysing sales data from the last five years, the REIV found that first home buyers were mainly purchasing residential properties in the $300,000 - $450,000 price bracket.
Once the First Home Owner Boost was removed, sales in this price range fell by 30-40 per cent, indicating just how influential first home buyer presence is in the market.
In order to get this figure closer to when it was at a high, the REIV has suggested introducing more affordable housing into the Victorian property market.
However, the Real Estate Institute of Australia (REIA) has put forth a different solution.
REIA President Peter Bushby stated that the Australian government should look towards modelling what New Zealand has done for its first home buyers - allow them to tap into their retirement funds to buy their first home.
The NZ government has KiwiSaver in place, which is a voluntary superannuation scheme where users can contribute part of their salary. These funds can then be used to buy a first home through the home purchase withdrawal scheme, or through a deposit subsidy scheme.
"With over 82 per cent of all Australian households holding at least some savings in their superannuation account and the average value across all households at $142,429 (HILDA Survey), some access to these sources could reverse the current trend of declining home ownership," said Mr Bushby in a September 4 statement.
A change such as this would aid those entering the property market for the first time and increase homeownership in the country.
