Investors put first home out of reach

THERE are fears first home buyers could be locked out of the market as property prices continue to surge and investors return to the residential property market in droves.

CoreLogic data released on Friday showed that in the three months to April, home values rose 6.8 per cent — the highest quarterly growth rate since December 1988.

The group estimates the total value of Australia’s residential real estate has reached a whopping $8.1 trillion.

“The Australian dwelling market has reached fresh record highs for the past four months, but the end of April marked the first time the total value of Australian housing broke the $8 trillion mark,” CoreLogic head of research Eliza Owen said.

“This puts Australian residential property at around four times the size of Australian GDP, and around $1 trillion more than the combined value of the ASX, superannuation and commercial real estate stock combined.

“For many Australians looking to get a foot on the property ladder, the continued strength in the market is putting home ownership further out of reach despite record low mortgage rates.

“Wages growth simply isn’t keeping pace.”

Real Estate Institute of Australia president Adrian Kelly said it was the 10th month in a row that loans to investors had risen after they hit a 20-year low in May last year.

RateCity research director Sally Tindall said speculators were storming back into the market to capitalise on predicted property price rises, to the detriment of first home buyers.

“The number of owneroccupiers looking for their first home has dropped for the second month in a row, which could be the start of a worrying trend as investors start muscling in at auctions,” she said.

“People are determined to get in now before they’re priced out completely.”