FHB Figures Inflated by Buyer Rush
A significant increase in first homebuyers may have been inflated by a last-minute rush to beat stamp duty changes.
First homebuyer numbers shot up 18% in November compared to October, accounting for the largest volume since December 2009 and adding more than $2.86bn to the mortgage market. But the numbers may be deceptive, according to RateCity CEO Damian Smith.
This is due to a rush of NSW first homebuyers looking to beat changes to the state's stamp duty concessions. Smith said this rush would have inflated November's figures, and cautioned against reading too much into the data.
"In NSW alone, close to 4,000 first home buyers financed properties in November - a significant jump of 34% up from the previous month. By comparison, the number of first home buyers in Victoria and Queensland rose by just 5% and 8% respectively, in the same period. Many home purchases in NSW were effectively brought forward to meet the stamp duty concession deadline before rulings changed on January 1, 2012," Smith said.
A similar spike in figures is expected for Queensland in the coming months as buyers try to beat a deadline for a $10,000 building boost grant in the state. Originally set to close at the end of January, demand has pushed the deadline out to the end of April.
Smith cautioned borrowers against being wooed by government grants and stimulus measures, saying potential buyers who save a larger deposit will find themselves in a better position than those who take advantage of government concessions.
"There may be a place for government grants and concessions, but borrowers shouldn't let changes to rules motivate their decision to enter the market unless they are in a good financial position," Smith said.
"The lure of a government grant means very little over the 25 year life of a loan; it's important that first home buyers do their sums carefully, and buy at the right time for the right reasons."