'Perfect storm' brings first homebuyer flood

by Adam Smith21 Nov 2011

Market conditions have caused a "perfect storm" for first homebuyer demand, it has been claimed.

Chris Slater, NSW state manager for AFG, has told Australian BrokerNews TV the aggregator has seen a massive influx of first homebuyers due to the perfect combination of market conditions.

"Interest rates are low, so affordability at the end of the day is up, so borrowers' capacity is up. We're seeing vacancy rates are low and housing prices are down, so from that perspective, we think it's the perfect storm for first homebuyers," Slater said.

Slater said AFG was pleased to see first homebuyers return to the market in large numbers. However, Mark Bambagiotti of Mortgage Choice claimed much of the demand may have been brough forward by the 31 December deadline for NSW Stamp Duty concessions. He predicted first homebuyer levels could taper off in 2012, but may return to more natural historic levels.

"Probably it's coming back a little bit in recent terms more to higher than natural levels. Hopefully we're going to see it return a little bit, but more to normal levels in 2012," Bambagiotti said.

The return of first homebuyer demand has also seen second tier and regional banks lift their market share. Slater said non-majors have captured much of first homebuyer demand, and have seen their market share grow to around 20%.

"Actually, we think the non-majors have held up pretty well over the last 12 months. We've seen them increase their percentage of the share of mortgages they're getting.
Suncorp is basically receiving more first homeowner customers than of the other non-majors, and we've seen some good fightback from Citi and ING," Slater said.

For more on the recent first homebuyer "perfect storm", check out The Big Story on Australian BrokerNews TV.

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The Big Story: A perfect storm for first homebuyers