Why the great Aussie home dream won’t die
EXCLUSIVE: THE Aussie dream of home ownership is alive and well, with first home buyers surging into the housing market at the highest levels in a decade after years of being pushed out by cashed-up, foreign and homegrown investors.
And much-maligned Millennials are proving the most influential population group on the country's property market, underpinning the recent boom in city apartment building but now preparing to move out of those units and into family homes, causing apartment prices to bust, according to a new national housing report.
The BIS Economics Australian Housing Outlook 2018 to 2021, which provides a snapshot and three-year forecast of the nation's property market, was released exclusively to News Corp this week.
The report, commissioned by international insurance giant QBE, shows despite rising property prices across much of the country, enthusiastic first home buyers are pouring into the market and lending to them is at the highest level since 2010.
It also reveals housing prices are expected to keep rising over the next few years, with the exception of the two biggest property markets of Sydney and Melbourne, where prices will fall in 2019, potentially providing a 12-month window of opportunity for first home buyers to snare a city pad.
Sydney prices, which have fallen 7.6 per cent already this year, are expected to fall another 3.5 per cent in 2019, before bottoming out in 2020 and then starting to rise again.
In Melbourne prices have fallen 1.6 per cent this year and are tipped to dip a further 4.2 per cent next year before creeping up again.
In the nation's other capitals, housing prices are forecast to grow.
Adelaide is tipped to lead the country with a whopping 12.4 per cent property price rise over the next three years, Brisbane to experience an 11.4 per cent increase over the same period, Canberra a 10.4 per cent rise, Hobart prices to grow by 7.9 per cent, Darwin by six per cent and Perth by five.
The outlook is less sunny for apartment owners in most cities, however, with unit prices set to fall in Brisbane by 5.1 per cent, Darwin by 4.5 per cent, Sydney by 3.1 per cent and Melbourne by 2.1 per cent, due to the increase in supply of apartments over recent years and weaker demand from investors.
QBE Lenders' Mortgage Insurance chief executive Phil White said the first homebuyer market was the strongest it had been since the Federal Government's post-GFC stimulus package delivered $1.5 billion to first home buyers.
Tighter lending standards for domestic investors and restrictions on international buyers, coupled with first homebuyer incentives, had made it easier for ordinary Aussies to enter the property market, he said.
And while record low interest rates in recent years had seen a surge in investor lending, this year's report showed it was scaling back, which would provide further room in the market for first home buyers over the next couple of years.
"Lenders' responses to regulatory restrictions have contributed to the softening of the market. State government incentives have encouraged first home buyers to enter the market after several years of being pushed out by domestic and foreign investors," Mr White said.
Millennials, born between 1981 and 1996, were the most influential group on the country's property market and had been largely responsible for the record demand for new apartments and units in cities over the last decade, "providing a steady stream of tenants to occupy these dwellings", the report states.
And their reign is not over yet.
Millennials will continue to influence the nation's property market heavily into the future, as they marry, have families and move out of small rented units into houses they own.
"The ageing of the millennial population over the next decades is expected to create a new dynamic for the residential property market," the report says.
"The boom in apartment construction over the past decade has been key in accommodating the millennial population as young renters and first-time homebuyers but the housing market will need to change again over the next decade to be able to accommodate Millennials in their next stage of life."
It was not known whether Millennials would seek to live in cheaper, outer suburban areas with their families, or buy houses in the country's cosmopolitan cities or city fringes.
Chief economist for the REA Group Nerida Conisbee said it was possible regional cities such as Geelong in Victoria and Wollongong and the Central Coast in New South Wales - within commuting distance of the capitals of Melbourne and Sydney - would be the beneficiaries of the shift as they offered great lifestyles and comparatively affordable housing.
Mr White said foreign investment in Australian property was expected to decrease further in coming years due to increased approval fees, stamp duty and land tax surcharges, as well as tighter capital controls from foreign governments, especially China, which had influenced how much money investors could take out of their country.
But overall, the Australian housing market would be supported by strong population growth and migrant arrivals into the future, which would underpin demand for new housing developments across the country and help sell existing property, he said.