First Time Home Buyers make new home sales sag

As First time home buyers retreat to the sidelines sales of new homes have sagged, breaking a four-month streak of gains in Australia's housing industry.
Figures from the Housing Industry Association (HIA) show total sales of new homes dropped a seasonally-adjusted 5.7 per cent last month.But sales in the apartment sector rose 6.1 per cent in May, reversing a fall in April.
Overall, sales were still up 15 per cent from their low point in December. The association says some of the reduction in new home sales could have been linked to negative speculation about the Federal Budget.
It is expected to convert to a recovery in home building activity from the June quarter of 2009 HIA senior economist Ben Phillips says the combination of low interest rates and the $21,000 first home boost lifted prospects for the industry. "The vast majority of the housing recovery has been at the first home buyer end of the market," he said."As that segment inevitably slows over the remainder of 2009, it's vitally important that the much larger trade-up and investor segments return to health."
Mr Phillips says first home buyers cannot fill the hole in home building on their own."There are other markets - mainly the change-up market and the investor market, which are the majority of the residential new homes market, and they're still running at really just a trickle," he said."So as the first home buyer grant cools over the coming six to 12 months, we're likely to see some poorer numbers start to flow through."

First home buyers buy as rents rise

First home buyers in NSW jumped by 50 per cent between February and March compared with existing home owners.Federal Government figures show that NSW remained the nation's home buying hot spot, with 6084 first-time buyers in March.The jump was expected and in part due to the Rudd Government's $21,000 First Home Owners Grant Boost was to expire in June, but has now been extended as announced in the May budget. The total number of home buyers across the country rose from 12,664 in February to 17,265 in March - an increase of more than a third.Housing Minister Tanya Plibersek has welcomed the six-month extension of the Home Owners Grant Boost, saying it would help more Australians realise their dream of home ownership."People who have been finding it difficult to get into the housing market are now seeing it as more affordable," she said. "By extending the grant, we are giving people more time to make a sensible decision."There would be long-term benefits for the economy, predicting a "flow-on effect" into the early part of next year as new homes are completed and home buyers require soft and hard furnishings to complete their new homes.A 12.3 per cent drop in the median house price in Sydney over 2008, and other drops before 2007 according to Housing NSW figures, could also be fuelling the buying boom.As house prices fell, rents increased. The median rent for NSW dwellings was $325, up by 8.3 per cent over the year. In Sydney, the median rent rose $5 to $390 in the March quarter.Some have predicted a minor reduction in first home buyers with the announcement after the extension.A Real Estate Institute of NSW spokesman said that, with tough times forecast to continue next year, the grant had not been extended long enough."We believe the additional incentive should run until at least July 2010," he said.