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First home buyers return to market

Staff Reporter 3 minute read

The introduction of beefed-up first home buyer grants has translated into increased activity, according to major brokerages.

Data released today by Australian Finance Group (AFG) indicated that first home buyer deals hit a 12 month high of 1,150 in October.

As a percentage of AFG customers, first home buyers represented 16.43 per cent in October, compared to 14.37 per cent in September; in April, May and June this year first home buyers only accounted for 10 per cent of all AFG clients.

The boost to the First Home Owners Grant (FHOG) combined with falling interest rates, sluggish property markets and improving affordability, has made the market more attractive to first home buyers.

Mortgage Choice has seen a strong trend among young singles and young couples taking advantage of the combination of these current market conditions.

“We have seen a strong level of enquiry among first home buyers borrowing in the vicinity of $300,000-$350,000 for their first property.

“Apartments and units are popular choices at this time,” said Mortgage Choice’s senior corporate affairs manager Kristy Sheppard.

Jennifer Nielsen, LoanMarket’s chief executive, said 70 per cent of enquiries to the group’s call centres were from couples, a quarter from single buyers and around five per cent from those purchasing with friends.

In terms of loan sizes, Ms Nielsen said couples tended to look for loans of approximately $500,000, while singles around $300,000.

While large brokerage groups have reported increased first home buyer activity it appears to be taking some time to filter through to front line brokers.

Mark Mellick of Auspak Financial Services said he hadn’t seen much activity from the first home buyer sector as yet.

“People are still very cautious and I think they are waiting to see some certainty in the economy,” he said.

Mr Mellick said it could take a few months for confidence to return and does not expect a real pickup in activity until after Christmas.

Simon Pressley, managing director of 6 Point Finance, said he also hadn’t seen any increase in activity yet, but it was an area he was keen to capitalise on.

“It’s certainly a market we see as an opportunity,” Mr Pressley said.

Mr Pressley said a lot of potential buyers did not seem to realise they could be eligible to enter the market, so he was developing a marketing initiative to reach these potential customers.

“We are putting a kit together for potential first home buyers to address the many questions they might have such as how much they can borrow and what sort of finance is available,” he said.

Published: 04-11-08

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