What impact will changes to the first home buyer scheme have on the property market? | 7.30

Key Concepts

• First home buyers' struggles in the Queensland property market
• Rising house prices and market competition
• Impact of government incentives (Home Guarantee Scheme)
• Property market dynamics in Brisbane and Ipswich
• Role of buyers' agents
• Affordability crisis and potential long-term consequences

1. The Sizzling Queensland Property Market

• The property market in southeast Queensland is described as "scorching," making it difficult for first home buyers to enter.
• An auction in Brisbane South exemplifies the situation, where a renovated three-bedroom home on a 604 sqm block, previously sold for $565,000 six years ago, is expected to fetch double that amount.
• Thomas and Courtney, a young couple searching for their first home for four months, find the prices "inaccessible" and "unattainable."
• Median prices in Brisbane have risen by $86,000 in the past year, the steepest increase among Australia's capitals. House prices are up by almost 9%, while unit prices have jumped close to 18% in the same time.
• The market is described as a "hunger gamesy market where everything is at a percent more week to week."

2. Auction Experience and Frustration

• Thomas and Courtney participate in an auction, offering $1.2 million, but are quickly outbid by a $1.4 million offer.
• The property sells for above the reserve price of $1.3 million.
• Thomas expresses disappointment, stating, "You saw me come in 200k underneath that, hoping to um I don't know, build up to the top of my budget, not starting at the at the top."
• He notes that rising rent prices make it difficult for first-time home buyers to save for a deposit, and prices jump again as soon as they have a deposit.

3. The Role of Buyers' Agents

• Buyers' agent Sam Hunter assists clients in navigating the competitive market.
• He notes that most of his clients are "pretty defeated" after missing out on multiple properties over six months or more.
• His advice is to "figure out what that comfortable budget looks like, stick to it, and understand that you can compromise outside of spending more money than potentially want to."
• Sam helped Tom and Crystal find a four-bedroom home in The Gap for almost $1.5 million, triple what the last family paid in 2017.
• Crystal emphasizes the importance of having a buyers' agent in the current market.

4. Factors Driving Price Increases

• Population growth from interstate and international migration is a significant factor.
• The upcoming Olympics is driving demand, with increased construction and related activities.
• Supply is falling behind demand, exacerbating the price increases.

5. The Ipswich Market as an Alternative

• Rising prices in Brisbane are pushing people to look for cheaper options in areas like Ipswich, 40 km west of Brisbane.
• Jordan Strudwick, CEO of a property group in Ipswich, notes the rapid growth in the area's prestige market.
• Properties that were once considered overpriced at $750,000 are now selling for $1.3 million to $1.4 million.
• June Frank, a real estate agent in Ipswich, highlights the abundance of properties available in the area.

6. The Home Guarantee Scheme and Its Potential Impact

• The Home Guarantee Scheme allows first home buyers to purchase property with a 5% deposit without paying lenders mortgage insurance, with the federal government acting as guarantor.
• The scheme has removed the ceiling on how much you can earn and increased borrowing limits, with Queensland up to $1 million in major cities.
• Jordan Strudwick believes the scheme will bring first home buyers from Brisbane to Ipswich, closing the price gap between the two areas.
• He expresses concern that home ownership may become unattainable for young people in the future, creating a divide between those born into home-owning families and those who are not.

7. Concerns About the Scheme's Effectiveness

• The federal government predicts the scheme will only drive prices up by 0.5% over six years.
• Jordan Strudwick questions this prediction, arguing that high-income earners qualifying for the 5% deposit will increase demand at the bottom end of the market, pushing prices up and consuming available stock.
• He notes that multiple offers on each property indicate a strong market tail, with many buyers missing out.

8. Conclusion

The Queensland property market presents significant challenges for first home buyers due to rising prices, increased competition, and limited supply. Government incentives like the Home Guarantee Scheme aim to help, but there are concerns that they may inadvertently drive prices up further, potentially making home ownership unattainable for many young people. The market dynamics are forcing buyers to consider alternative locations like Ipswich, but even these areas are experiencing rapid price growth. The situation requires careful consideration of market dynamics and potential long-term consequences.