The ‘single biggest factor’ driving the rise in first homebuyer activity for Australians
The number of loans issued to first home buyers has risen by 20 percent over the past 12 months
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The number of new loans being issued to the most budget-conscious cohort of buyers in the property market – first-time purchasers – has increased by 20 percent over the past 12 months, according to new data from the Australian Bureau of Statistics (ABS). Almost 10,400 new loans were written for first home buyers in November, 31 percent of them in Victoria, 23 percent in New South Wales and 19 percent in Queensland.
Despite the common affordability challenges faced by younger Australians, lending to first homebuyers is currently tracking at 29.4 percent of all new owner-occupier finance, which is above the 10-year average of 24.3percent. The value of all owner-occupier loans rose by 0.5 percent in November to $17.86 billion, up 10.6 percent over the past 12 months. The value of investor loans rose by 1.9 percent to $9.72 billion, which is 18 percent higher than a year ago. But the boost to first homebuyer finance is much bigger, up 2.8 percent in November to $5.25 billion, but more significantly, it’s up 25.8 percent compared to a year ago.
The ABS points out that a large component of November’s increase in first home buyer finance was due to a surge in Queensland. This coincides with a doubling of the state’s First Home Owner Grant to $30,000 for eligible first home buyers purchasing or building a new home. The grant is the equal highest state grant available to young buyers and triple the size of grants available in New South Wales and Victoria.
There are two key factors underpinning rising first home buyer activity, despite today’s high interest rates. The first and most significant is the growing impact of the Bank of Mum and Dad, with parents typically getting involved at the start of the process. They are either gifting cash to help fund the deposit, offering rent-free accommodation to their children throughout their 20s so they can save a deposit themselves, or going guarantor on their loans.
Research published last year by the Australian Housing and Urban Research Institute (AHURI) found parental help has “become one of the key enablers of the transition into home ownership”. According to AHURI’s findings: “Parental transfers, both direct and in-kind, are increasingly assisting individuals make a more rapid transition into home ownership. Analysis identified that in-kind transfers in the form of co-residence with parents (and not renting) lifts the likelihood of transitioning into home ownership by 40 percent.”
AHURI says first homebuyers’ ability to save a deposit using their earnings alone had diminished over time as property values – and thus the required deposit amounts – have risen. According to PEXA data, buyers in NSW needed a median deposit of just below $120,000 to buy a home in FY23, up 3.9 percent on FY22. In Victoria, the median deposit was $84,723, down 0.5 percent, and in Queensland it was $78,143, up 8.5 percent.
AHURI said family support “was found to be the single biggest factor in supporting being able to buy a home”. In Australia’s most expensive market, Sydney, where the median house price is currently $1.4 million and the median apartment value is above $830,000, according to the latest CoreLogic figures, AHURI says family support “was an essential component of being able to buy a home in all cases …”.
The second factor boosting first home buying today is higher uptake of the Federal Government’s expanded Home Guarantee Scheme, which enables eligible buyers to qualify for a loan with just a 5 percent deposit and a government guarantee on the rest, saving them thousands of dollars in mortgage insurance.
Housing Australia says one in three of all first home buyers in FY23 used the scheme, up from one in seven in FY22. This reflects the expansion of the scheme, with more places funded by the Albanese Government and broader eligibility criteria enabling more people to participate.
Higher interest rates have also encouraged more participation, says Housing Australia’s head of research, data and analytics, Hugh Hartigan.
“The broader macroeconomic environment with rapidly rising interest rates has substantially decreased mortgage serviceability with flow-on effects for affordability and this has led to first home buyers relying more heavily (proportionally) on the scheme than in previous years,” Mr Hartigan said.
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The 25-room mansion was built for an heiress and later belonged to a socialite and architect on the Empire State Building.
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A 110-year-old Colorado estate that has hosted Frank Sinatra and Lyndon B. Johnson just slashed $10 million off its price tag.
The 12,000-square-foot manor house—with 25 rooms—and its five accessory dwelling in the alpines of Evergreen was relisted on Friday asking $16.8 million, down from its initial $26.8 million price in 2023.
The sellers, Richard and Pamela Bard, who paid $1.3 million for the “legacy property” named Greystone Estate in 1992, have shopped it around on and off for the past 20 years, according to agent Jessica Northrop at Compass Real Estate.
Richard Bard, CEO of his own private equity firm, has “hosted many corporate events and retreats where important business is discussed but they are also able to relax,” Northrop said. “Greystone has a special way of making people feel at ease.”
Bard said “it’s not a casual effort” to sell. He said it’s difficult to find a buyer with the facilities to “take care of it.”
The Bards intend to move closer to their children in Denver.
Before the Bards, Greystone Estate had several eras—as a summer house, a guest ranch and a business base—since it was built in 1915 by Genevieve Phipps, an industrialist’s daughter.
Phipps, who spent her inheritance on the land, built the 54-acre summer escape with the “elegance and feel of a fine Adirondack mansion combined with a mountain rustic style,” according to an online record of the estate’s history.
Its heyday, arguably in the 1940s to 1980s, saw Sinatra, Johnson and Groucho Marx come through its doors, when its owner William Sandifer, a socialite and one the Empire State Building’s architects, operated a guest ranch out of the place.
The Bards, who used a carriage house on the property as their company headquarters, completed Greystone’s full modernization in 1997. They also opened up the living and dining areas to receive more light, raised the ceiling on the upper level and combined several rooms to create a primary suite.
They replaced an outdoor pavilion and its helipad with something more suitable for their daughter’s wedding in 2001, according to Northrop.
The main 25-room manor includes a wine cellar, bar, gym and library.
The additional structures, which include a cottage, a log cabin, a pool house, a carriage house and a pavilion and guest house, surround the pool area and overlook acres of aspen groves and mountains.
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