Renovations may be good news for builders but they’re bad news for first home buyers, according to one lender.
John Oliver, chief executive of South Australia’s government-backed lender, HomeStart Finance, said renovators are adding yet another hurdle for first home buyers to overcome.
“A healthy home buyer cycle has a good balance of first home buyers and ‘upgraders’, who transition from their first home to their next home within a few years, clearing a pathway for first home buyers to enter the market,” he said.
“But what we’re currently seeing is many upgraders deciding to sit tight and focus on renovating rather than selling up and moving on.
“This has contributed to stalling the home buyer cycle and takes away a major source of affordable housing that in the past would have provided a pathway for first home buyers to start sooner.”
Real Estate Institute of South Australia chief executive Greg Troughton said the “heavy upfront cost” of stamp duty and land tax could be driving people to renovate instead of buy.
“Even with record-low interest rates, we see the important first rung on the property ladder not being reached by first home buyers,” he said.
“Home buyers shouldn’t have to face these heavy taxes every time they purchase a property and it’s a systemic problem that is impacting on the home buyers’ cycle at every level.”
[Related: Building booms as renovations bounce back]