First home buyers in as investors shown the door

There appears to be some more positive news in the new home buyer market after a long period in the doldrums, with new data showing some increased activity from first home buyers.

According to Red23’s New Land and Housing Market Update for June, first home buyers are the most active in Victoria due to its subdued price uplift and increase in stock availability.

In Victoria, first home buyers currently make up a third of all owner-occupier housing finance.

Over the past 12 months, Red23’s research shows an increase in the number of first home buyers purchasing, and a steep decrease in the number of investors.

Sixty-nine percent of first home buyers were renting at the time of purchase, an increase of 7 per cent compared to the previous

12 months.

In comparison, there has been a 2 per cent decrease in the number of buyers previously living with parents or in group households, indicating that rental price increases are pushing them into buying property.

Red23 managing director Terry Portelli said first home buyers were the backbone of Victoria’s housing market, now making up 32.1 per cent of owner-occupier finance.

“Rising rental costs have pushed more renters to purchase, evident from a 7 per cent increase over the past year.

“Interestingly, 57 per cent of these buyers haven’t committed to a builder at the time of land purchase, relying more on referrals from family and friends.

“Despite longer market durations, the demand for 12.5x28m lots remains high, with stable prices and lending conditions, first home buyers are set to keep leading the market forward.”

The report shows that family household compositions are highest at 38 per cent of all purchasers, while couple household compositions have decreased slightly.

While there is little change in all other characteristics, there has been an increase in first home buyers planning to build a house between 21 squares and 30 squares, but a decrease in all other house sizes.

Also in this time period, first home buyers have been more driven by location, affordability, and being close to family and friends, as well as proximity to facilities.

The data indicates the Greater Geelong land market has seen a 26 per cent fall in sales in the first half of 2024 in comparison to this time last year.

In 2023, there were just under 500 lot sales, whilst this year is tracking at a slower pace, there is optimism that with competitive pricing and rebates of up to $30,000, more new home buyers will re-engage.

The median land price is $427,000 for a 425sqm lot, an increased by 3 per cent year on year while the median land size increased by 1 per cent.

The price increase has been influenced by land prices in Point Lonsdale over $1 million.

Red23 reports consumer confidence remains broadly unchanged, with some pessimism and uncertainty around buying a home due to household financial pressures, but with house prices remaining stable and rates remain on hold, first home buyers will continue to be the leading buyer group in the market due to stability in price and lending.